House Hearing, 107TH Congress - September 11, 2001 Plus 30: Are America's Small Businesses Still Grounded

SEPTEMBER 11, 2001 PLUS 30: ARE
AMERICAS SMALL BUSINESSES

STILL GROUNDED?
HEARING
BEFORE THE
SUBCOMMITTEE ON REGULATORY REFORM

AND PAPERWORK REDUCTION
OF THE
COMMITTEE ON SMALL BUSINESS

HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
WASHINGTON, DC, OCTOBER 11, 2001
Serial No. 10731
Printed for the use of the Committee on Small Business
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COMMITTEE ON SMALL BUSINESS
DONALD MANZULLO, Illinois, Chairman
LARRY COMBEST, Texas NYDIA M. VELA ZQUEZ, New York
JOEL HEFLEY, Colorado JUANITA MILLENDER-MCDONALD,
ROSCOE G. BARTLETT, Maryland California
FRANK A. LOBIONDO, New Jersey DANNY K. DAVIS, Illinois
SUE W. KELLY, New York BILL PASCRELL, JR., New Jersey
STEVE CHABOT, Ohio DONNA M. CHRISTENSEN, Virgin Islands
PATRICK J. TOOMEY, Pennsylvania ROBERT A. BRADY, Pennsylvania
JIM DEMINT, South Carolina TOM UDALL, New Mexico
JOHN R. THUNE, South Dakota STEPHANIE TUBBS JONES, Ohio
MICHAEL PENCE, Indiana CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey DAVID D. PHELPS, Illinois
DARRELL E. ISSA, California GRACE F. NAPOLITANO, California
SAM GRAVES, Missouri BRIAN BAIRD, Washington
EDWARD L. SCHROCK, Virginia MARK UDALL, Colorado
FELIX J. GRUCCI, JR., New York JAMES R. LANGEVIN, Rhode Island
TODD W. AKIN, Missouri MIKE ROSS, Arkansas
SHELLEY MOORE CAPITO, West Virginia BRAD CARSON, Oklahoma
BILL SHUSTER, Pennsylvania ANI BAL ACEVEDO-VILA , Puerto Rico
DOUG THOMAS, Staff Director
PHIL ESKELAND, Deputy Staff Director
MICHAEL DAY, Minority Staff Director
SUBCOMMITTEE ON REGULATORY REFORM AND OVERSIGHT

MIKE PENCE, Indiana, Chairman
LARRY COMBEST, Texas ROBERT BRADY, Pennsylvania
SUE KELLY, New York BILL PASCRELL, JR., New Jersey
SAM GRAVES, Missouri CHARLES GONZALEZ, Texas
ROSCOE BARTLETT, Maryland DAVID D. PHELPS, Illinois
TODD AKIN, Missouri JAMES P. LANGEVIN, Road Island
PAT TOOMEY, Pennsylvania ANI BAL ACEVEDO-VILA , Puerto Rico
BARRY PINELES, Professional Staff Member
(II)
CONTENTS
Page
Hearing held on October 11, 2001 .......................................................................... 1
WITNESSES
Coyne, James K., President, National Air Transportation Association .............. 5
Tarascio, Maureen, Owner, Air East Management .............................................. 8
Doughty, George F., Executive Director, Lehigh-Northampton Airport Author-
ity on behalf of Airports Council International-North America ....................... 10
Wartofsky, David, Partner, Potomac Airfield ........................................................ 12
DeGroot, Quintin, President, Spencer Avionics .................................................... 14
Adams, Bonnie, Owner, Lewiston Travel Bureau ................................................. 27
Swift, William H., President, Business Traveler Services, Inc ............................ 30
Torres, Hector, Vice President, Capital Hotels ..................................................... 32
Cheseboro, David, President, Daytona Orlando Transit Service, Inc ................. 35
APPENDIX
Opening statements:
Pence, Hon. Mike .............................................................................................. 43
Shuster, Hon. Bill ............................................................................................. 47
Prepared statements:
Coyne, James K ................................................................................................ 50
Tarascio, Maureen ............................................................................................ 55
Doughty, George ............................................................................................... 60
Wartofsky, David .............................................................................................. 69
DeGroot, Quintin .............................................................................................. 74
Adams, Bonnie .................................................................................................. 81
Swift, William ................................................................................................... 90
Torres, Hector ................................................................................................... 94
Cheseboro, David .............................................................................................. 103
Additional material:
Letters submitted by Ms. Christian Christensen .......................................... 111
Prepared statement of Paul Fiduccia .............................................................. 121
Prepared statement of Jason Dickstein .......................................................... 125
(III)
SEPTEMBER 11, 2001 PLUS 30: ARE AMERICAS
SMALL BUSINESSES STILL GROUNDED
THURSDAY, OCTOBER 11, 2001
HOUSE OF REPRESENTATIVES,
COMMITTEE ON SMALL BUSINESS,
SUBCOMMITTEE ON REGULATORY REFORM AND OVERSIGHT,
Washington, DC.
The committee met, pursuant to call, at 1:05 p.m. in room 2360,
Rayburn House Office Building, Hon. Mike Pence (chairman of the
committee) presiding.
Mr. PENCE. This hearing of the Subcommittee on Regulatory Re-
form and Oversight of the Committee on Small Business will come
to order.
I want to begin today by thanking all of those who will be testi-
fying on our two panels for your time on what turns out to be a
rather auspicious day, and to say that we do anticipate other mem-
bers joining us as we go forward in what will probably be two or
three hours of testimony and questions. Several members of our
subcommittee indicated that they would be attending the Pentagon
ceremonies this morning, which we certainly respect and appre-
ciate, but wanted very much to go forward with this hearing given
the sacrifices that the various witnesses have made in being here
and for which we are very grateful.
Let me begin with some opening remarks. Then I will introduce
each of the first panel in succession. You will be recognized for five
minutes of remarks, and those of you that are more veteran here
on the Hill will appreciate the lights will signal you. Green will
represent the obvious, yellow will mean not step on the accelerator
but begin to slow down, and red, you will not be gaveled unless you
seriously violate the red light, but we will just ask you to wrap up
your comments as best you can. We also would indicate that those
of you that have submitted written remarks, those will obviously
be made a part of the record of this hearing.
And we will hold questions, I have questions for all of the wit-
nesses, as I am sure other members who will be joining us as we
go, questions we will hold until all of the various panelists have
made their opening statements, and then we will go into the ques-
tion and answer session.
My parents generation remembers where they were when Frank-
lin Delano Roosevelt died. Even elementary school children of my
generation remember where they were when they heard that Presi-
dent Kennedy had been assassinated, as do I. Indelibly etched in
our collective memories will be the pictures on television and the
occurrences that occurred one month ago today, September 11,
(1)
2
2001. The events of 11 September have reverberated throughout

this nation and the world, as I saw in evidence at a recent ter-
rorism conference that I attended in Berlin.
Though at a glance, they may seem pedestrian, todays hearing
examines what are in fact significantly important economic con-
sequences of the events of September 11. Immediately after the
events, the Federal Aviation Administration, quite correctly, shut
down all air traffic throughout the United States. During the shut-
down, the commercial airlines estimated that they lost more than
a billion dollars. Congress responded appropriately, in my judg-
ment, with an economic package to stabilize commercial airlines.
However, the events of September did not just affect the commer-
cial aviation industry. Shaken by concerns over the economy and
the safety of air travel, Americans and foreigners have, as many
of those who will give testimony today will attest, cancelled plane
flights, businesses have substituted video and telephone conference
calls for face-to-face meetings that required travel, and people have
simply cancelled vacation plans in their entirety.
The economic consequences of the events of September 11 have
not just been felt in New York City and in Washington, D.C., but
throughout the country, and certainly in my home state and home
district, in central Indiana. And the impact has been most dramatic
on thousands of small businesses that rely and depend on aviation
for their livelihood.
It is easy to understand the effect that the shutting down of com-
mercial aviation had on airlines. But the reverberations of 11 Sep-
tember permeate the American economy much more deeply. Con-
gress so far has only dealt with the problems of some very large
businesses. I expect testimony today will prove invaluable, as I am
sure my colleagues will agree, as the Small Business Committee
deliberates on the actions it can take to assist the small business
community whose plight has been largely ignored by government
to date.
Obviously, the businesses that serve aviation have been affected
most dramatically. Smaller airports, like many of those in my dis-
trict, whether they serve commercial airlines or general aviation,
have suffered substantially through reduced flight operations. Not
only does this reduce the revenue streams of the airports, but it
also adversely affects the businesses that provide support, such as
catering services, fuel suppliers, aircraft maintenance and the like.
And we cannot forget that access to air service plays a vital role
in economic developmentan issue that is of crucial importance to
many members of the committee and of this subcommittee.
Travel and tourism are an important sector of the American
economy in the four corners of this country. The travel industry de-
pends on air transportation to get many of their customers to des-
tinations. In the wake of the events of 11 September, airlines have
seen air traffic reduced by 40 percent. And on the domestic and
international flights that this chairman has personally taken, 40
percent would be a very generous estimation of participation in the
flight. When people do not fly, hundreds of thousands particular of
small businesses suffer, and we are here to talk about that today.
It is easy to picture the problems faced by concessionaires at
Reagan National Airport who have had no business for nearly a
3
month. But what about a restaurant or a newsstand that has lost

significant amounts of foot traffic because it is now located beyond
the security checkpoint? One can also imagine the problems facing
the rental car industry where 90 percent of business is done at air-
ports that are now suffering from substantially reduced traffic.
Travel agents have lost revenue from cancellation of airline flight,
hotel and car rental reservations, and cruises. Fine dining res-
taurants now serve fewer tourists and business customers.
Hotels, large and small, cannot fill their rooms, and not just in
New York City or Washington, D.C. Hoteliers in Los Angeles Coun-
ty have already laid off 40 percent of their workers, as an example,
and closed entire floors in efforts simply to stay afloat.
Taxicabs and limousines that take passengers to and from the
airports have also seen severe reductions in operations and rev-
enue. Given the concern about air travel, one might imagine that
bus operators are thriving; they are not. They join the rest as they
continue to struggle in this economy.
These grim data show that the small business economy is with-
out a doubt struggling. Businesses across the country are feeling
the adverse effects of the events of 11 September. We will hear
from a wide variety today of small business owners of aviation-re-
lated and aviation-dependent businesses on their economic outlook.
I also look forward to their recommendations on legislative and
regulatory changes that can be made to help them through this cri-
sis time. Those suggestions are particularly timely as the com-
mittee is examining changes to the Small Business Act that will
provide greater assistance to small businesses that have been ad-
versely affected by the economy as a whole, and not just those in
declared disaster areas.
I look forward to the testimony today. I want to thank all the
witnesses for taking the time to travel to Washington, D.C. and be
willing to be with us. And given the importance of this hearing, I
would also like to offer each member of the subcommittee present
an opportunity to make an opening statement.
And with that, I would like to turn to the gentlelady from the
Virgins Island, Ms. Christian-Christensen for her opening remarks,
and welcome.
[Mr. Pences statement may be found in appendix.]
Ms. CHRISTENSEN. Thank you. Thank you, Mr. Chairman, and
thank you for holding this hearing.
The events of September 11th clearly had a devastating effect on
several vital sectors of our economy. Most notably has been the im-
pact on the airline industry where estimates of losses are in the
range of two to three billion dollars, and industry-wide layoffs ex-
pect to exceed $100 billion.
To shore up this industry, Congress acted quickly and passed the
Air Transportation Safety and System Stabilization Act. The legis-
lation provides $15 billion through grants and loans to assist the
airline industry. This legislation was an important first step, but
it is only the beginning, not the end. Still unresolved is the strug-
gle facing thousands of workers in the airline industry who have
lost or stand to lose their jobs. US Airways has announced they
will eliminate 11,000 jobs, a 23 percent cut as a result of the at-
tack.
4
Congress must act with the same speed they did to come to the
aid of the airlines, ensure that workers not only have access to un-
employment insurance because it is estimated that almost half of
all laid off airline workers do not currently qualify for unemploy-
ment, but also to extend health coverage through COBRA and pro-
vide training assistance.
While the challenges facing both the airlines and their workers
have been well documented, what has been lost for the most part
is the effect that these events have had on the thousands of small
businesses in air travel and tourism industries. Travel agents have
seen their numbers plummet with the possibility of losing a full
one-third of the industry if action is not taken soon. For the motor
coach industry, the picture is not much brighter. Tour operators re-
port cancellations of between 30 and 80 percent, amount to 500,000
lost trips per day, and job cuts of up to 20 percent.
What is clear is that actions must be taken to help build a bridge
across this difficult period. Democratic members of the committee
have introduced H.R. 3011 that allows industries specifically af-
fected by the events of September 11 to qualify for low-cost and no-
cost loans through the Disaster Loan Program. This will provide
some assistance while these vital parts of our economy get back on
their feet. The committee should act on this common sense solu-
tion, and I would encourage my friends on the other side of the
aisle who care about the plight of these small businesses to join us
in passing this important legislation.
These industries play an important role in the air industry.
When we took up the airline bailout bill, many said if we just made
the airline industry whole, everyone would benefit. We did that,
but what is clear is that the whole airline industry depends on
these small businesses just as much as they do the airlines because
if there is no one to fuel, repair, supply or clean an aircraft, no
travel agents to sell tickets, no buses to get travelers to their des-
tinations, no hotel to stay at, restaurants to dine in, the bottom
line is that people will not travel and the bailout for airlines will
be in vain.
I represent the U.S. Virgin Islands, and for us tourism is 70 per-
cent of our economy, and we are very dependent on airlines, so this
is particularly important to us. This scenario is exactly why we
must act to assist small businesses and help them through the
rough times ahead as Americans gradually regain a sense of secu-
rity and translate that confidence into new travel plans.
I am also particularly pleased that this hearing is scheduled to
look at the smaller aviation industry as well. In the past two days,
I have received several pieces of correspondence from small general
aviation airlines in the Virgin Islands requesting my help in get-
ting an FAA ban lifted on Part 91 flights from many foreign juris-
dictions which has caused a virtual shutdown on these small Virgin
Island airline operators. As an example, we have the British Virgin
Islands 40 miles away. For them to come in from there, they would
have to go to the Bahamas, about 1,600 miles away, and then come
back to the Virgin Islands. That is just one example of some of the
issues raised in those letters.
5
I look forward to hearing the testimony of our panelists this

morning. And once again, thank you. This is a very important
hearing.
Mr. PENCE. Thank you, Dr. Christian-Christensen, and thank
you for being here on what we all know is a very busy day on the
Hill and off the Hill.
With that, as I mentioned before, for the benefit of my colleague,
that we will hear from each of our witnesses on this first panel,
and then we will each of us in turn ask questions of the witnesses
that are of interest based on your testimony.
Our first witness today, we are very pleased to have Congress-
man James Coyne, who is president of the National Air Transpor-
tation Association. Congressman Coyne served in the United States
Congress where he had a distinguished career. He then served as
a member of the White House senior staff and became National Air
Transportation Association president, representing nearly 2,000
large and small aviation businesses in April of 1994.
Since leaving the White House in 1985, he has also been an au-
thor, a consultant, and a popular speaker around the country, had
been president of the American Consulting Engineers Council,
founder and president of the American Tort Reform Association,
and also worked in the term limits movement around the country.
His love for and commitment to aviation though is very likely
what brings him to this panel today. It has been an important facet
of his personal and professional life. Two business airplanes helped
him to expand his business significantly in the 1970s. He also regu-
larly flew from Washington to Pennsylvania throughout his terms
in Congress, and as NATA president, he has visited over 300 FBOs
and aviation service businesses across the country.
He calls McLean, Virginia home, and is also married to an in-
strument-rated pilot as am I.
So Congressman Coyne, welcome, and you are recognized for five
minutes.
STATEMENT OF JAMES K. COYNE, PRESIDENT, NATIONAL AIR

TRANSPORTATION ASSOCIATION
Mr. COYNE. Thank you very much, Mr. Chairman. Congress-
woman Christensen, it is also a pleasure to have you here.
I should say it is a very small group of people of members of Con-
gress, former members of Congress or current members of Congress
who are fortunate enough to have a wife as a pilot. It keeps us on
the straight and narrow, I know, and I am very happy to be here.
I am also very happy that Mrs. Christensen is here because we
have had a lot of concern about the Virgin Islands. In fact, one of
those 300 airports that I have been to has been down to St. Croix,
and also to other locations, in St. Thomas, and I am very, very
happy to discuss with you the problems that they face.
But, first, I would like to describe, if I may very briefly, the im-
pact that our industry is enduring in response and as an effect, a
direct effect not only of the catastrophe that occurred of one month
ago today, but also in response to the actions of our federal govern-
ment in effectively responding to that crisis, but also imposing very
severe restrictions on aviation in America.
6
To put it quite simply, we face a catastrophe, a catastrophe un-

like any catastrophe has ever faced the businesses that make up
aviation in America today. Never before since the invention of the
airplane have so many small businesses in America in aviation
faced literal disaster, face bankruptcy, face the economic catas-
trophe that they face today.
Why is this? Well, simply put, as you know, any business has to
deal with the challenge of making a profit day in and day out. And
these businesses have suffered in two ways.
First, their sales have been devastated because activity has been
prohibited at most of these airports. Currently, today, there are
280 airports in America that are effectively shut down to all VFR
traffic, which in most of these airports represents between 75 and
85 percent of their activity. Today, 280 of these airports are effec-
tively shut down. Many airports are shutdown, as you will hear
from other witnesses, entirely still today airports here in the Wash-
ington area and the New York area and other places.
And, in addition, there are airports in the far-flung corners of
America, from Maine to Alaska to the Virgin Islands, Puerto Rico,
to North Dakota to the borders along our southern boundaries
where because of restrictions on international travel these airports
are effectively curtailed.
And I would especially like to bring to your attention the hard-
ships that these businesses are facing, which is principally because
of the actions of the federal government, which have restricted the
use of our airspace for the last 31 days in many different ways.
But not only have sales fallen for these companies in many cases
to zero percent, but in addition, their expenses are going up at the
worst possible time. Most of our member companies are facing in-
creases in insurance, and I do not want to criticize the insurance
industry, but clearly in this time of unusual threat and concern
there are many people in the insurance industry that have rushed
to cancel policies or to make it impossible to have affordable pre-
miums. Several of our member companies have been told that they
have been literally shut out of insurance, forced to go to what they
call naked in the insurance business. Others have seen insurance
premiums increased by 20- or 30-fold, not just 20- or 30-percent,
but 20- or 30-fold in many areas.
In addition, new security costs are being imposed on many of
these businesses. Local airports are demanding new procedures,
new staff to be hired, new equipment to be bought.
So at a time when their sales in many cases is only a tiny frac-
tion of what it should be at this time, they are facing increased
costs. The result is that many of these businesses have laid off vir-
tually all of their employees.
I know businesses that have hadthat are owned, lets say, by
a husband and wife. They might have 20 employees. All 20 employ-
ees are laid off, and the husband and wife are coming into the of-
fice trying to barely stay alive, to keep afloat in these very hard
times.
I would like to especially mention one of our members who was
invited by the committee to be here. It is a typical small business
in North Dakota, a place that people might say is far removed from
the disasters that struck in New York and Pennsylvania and at the
7
Pentagon. But even in North Dakota, just as you know, Congress-

woman, in the Virgin Islands, this far-flung disaster has created
economic disaster.
The gentleman from North Dakota who was expected to be here
and who had been invited is the owner of a small operation in
North Dakota. The name of the company is North Country Avia-
tion, and you had invited him to be here, I think, a Neil Mathison,
but unfortunately he called us a couple of days ago and said there
was just no way he could afford to leave his business at this time,
to afford to buy the plane ticket to come here from North Dakota,
and he asked me to speak on his behalf.
Even in far-flung North Dakota, they have lost about 70 percent
of their business, over $100,000 just in the last 30 days, and that
far exceeds their normal profit in a full year. Much of their busi-
ness in North Dakota depends upon the ability to fly Americans up
to Canada, and to go on fishing and hunting trips. And they find
themselves, because of new government regulations, unable to do
that.
Same thing is true in Virgin Islands as you know, where the
principal operator there, Bulky Aviation, I am sure you are famil-
iar with, has seen its sales fall by nearly 80 percent over this past
month, and they do not see any light at the end of the tunnel.
So what has effectively happened, if I may say so, Mr. Chairman,
it is as though a tornado hit these airports; not one tornado, hun-
dreds and hundreds of tornados. The small business community
has frequently faced these kinds of disasters and looked to the gov-
ernment for relief against natural disasters. Now we hope that
they can give financial assistance, loans and other things, in the
same way, but not just to one airport with one tornado, but all of
these airports with a disaster that has affected them all.
I thank you very much for the opportunity. And if I may, I would
like my full comments to be included in the record, and I look for-
ward to answering your question.
[Mr. Coynes statement may be found in appendix.]
Mr. PENCE. Without objections, and Congressman Coyne, thank
you for your thoughtful remarks.
With that we will recognize Maureen
Ms. TARASCIO. Tarascio.
Mr. PENCE [continuing]. Tarascio.
Ms. TARASCIO. Tarascio, right.
Mr. PENCE. Thank you very much.
And is your husband, Mike, here as well today? He is. Good.
Good to have you here.
Maureen Tarascio and her husband began Air East Airways in
1982. Air East is a flight training school located at Republic Air-
port in Farmingdale, New York. Maureen is the operations man-
ager of the flight school.
In 1994, the aircraft charter company began. Maureen also took
on the position of overseeing charter sales. The diversity of running
both companies is a challenge which she describedly enjoys. Dis-
patching the companys Lear Jets to different destinations makes
her job exciting and ever-changing on the flight school level whose
membership exceeds 300 students and pilots. Maureen guides
8
members to realize their dreams in becoming either commercial or

private pilots.
And Maureen Tarascio, you are recognized for five minutes testi-
mony before the subcommittee.
STATEMENT OF MAUREEN TARASCIO, PRESIDENT AND

OWNER, AIR EAST MANAGEMENT, FARMINGDALE, NY, ON BE-
HALF OF THE NATIONAL AIR TRANSPORTATION ASSN
Ms. TARASCIO. Thank you.
Chairman Pence, Ranking Minority Member Brady, Congress-
woman Christensen, and member of the Regulatory Reform Com-
mittee and Oversight Committee, my name is Maureen Tarascio. I
am the owner and operations manager of Air East Airways, a com-
pany located at Republic Airport in Farmingdale, New York.
I am also the secretary of LIBAA. LIBAA is Long Island Busi-
ness Aviation Association. It is a recently formed organization that
represents the business aviation industriesrepresents the busi-
ness aviation interest on Long Island.
Being from the Long Island area, as you well can understand, we
are deeply affected by the September 11th disaster. We are contin-
ually saddened by the death and destruction we have experienced.
My company is here today testifying on behalf of National Air
Transportation Association, an organization that represents nearly
2,000 aviation businesses.
I would like to tell you a little bit about my company and how
we are affected by the closure at Republic Airport. My husband, my
four children and I have worked 20 years to make the company
what it is today. We began with one aircraft in 1982, and have
built up the business to include our charter and maintenance de-
partment. We also recently completed our facility, a project which
took us 10 years to complete, so it was through a lot of hard work.
We are just like many companies in this industry. We work long
hours to provide our customers with a place to train for their pilots
license, and working with many people who are looking to advance
to that as a career. It is the love for aviation that drives us for-
ward.
Due to the closure of our airport, we are in jeopardy of losing ev-
erything we worked so hard to create. The ramifications of Repub-
lic Airport being closed to most operations for nearly one month is
immense. It has affected so many people: the worker who fuels the
aircraft, the caterers, the limo companies, even the deli or res-
taurant outside the airport who had our customers frequent their
establishments.
And I want to mention that Republic Airport happened to be one
of the busiest airports in the region. When we were closed down,
we normally had 580 aviation operations a day, we were down to
26.
General aviation is not just about the person who flies the air-
plane, its about the economic boost that is given to many indus-
tries related and unrelated.
Between September 11th and October 6th, Republic was closed
to all operations except Part 135 charter, which meant a 96 percent
reduction in total flight activities. This resulted in a loss of $4,000
9
per day to my company and $200,000 per day to all the companies
at Republic Airport.
At present, Republic is only partially open, the area is still only
50 percent operational. We need to have the restrictions lifted so
we can regain the other 50 percent revenue needed. We are con-
cerned that we have lost a percentage of our business that will
never be regained. There are some businesses at Republic which
may never reopen. We have lost business because local airports
such as Islip were open within a week after the disaster, so we
have customers that have gone to those airports to do their train-
ing.
One other great concern to us is the aviation insurance problem.
We have already experienced problems within the first week after
the WTC tragedy with the cancellation and resale to us of war risk
coverage. We also expect to have major increases in our premiums
when we go into renewal on our aviation insurance policy. There
are some companies at Republic that did recently go into renewal,
and they told us they had a 200 percent increase in their premium.
We had already experienced a 35 percent increase last year, last
January, so we can expect this to be phenomenal.
The problem with the insurance is that, of course, to make up
for that our rates are going to have to go up, which would make
it difficult for the consumer to be able to afford it, be it flight train-
ing or aircraft charter. Survival of our industry will directly affect
the national economy. We need funding to somehow make up for
the losses we have incurred. We are hoping to obtain that funding
in the form of federal grants, and we need this process expedited.
Our future and the future of general aviation greatly depends on
the federal aid our industry receives.
To sum up my testimony, first, I encourage members of the sub-
committee to ask the Bush Administration to lift the remaining en-
hanced Class B airspace restrictions throughout the country; and
second, I request that General Aviation Small Business Relief Act
of 2001 be approved and provide us with relief.
Thank you for giving me the opportunity to speak today.
[Ms. Tarascios statement may be found in appendix.]
Mr. PENCE. Thank you, Ms. Tarascio. I want to thank you and
Mike for making the trip here and giving us some harsh facts but
very important facts for this hearing.
Ms. TARASCIO. Thank you.
Mr. PENCE. I am going to yield to the gentleman from Pennsyl-
vania, Congressman Pat Toomey who has a witness at the panel
that he will introduce.
Mr. TOOMEY. Thank you, Mr. Chairman, and thanks for your in-
dulgence. I amright now another committee that I serve on is
marking up an important bill and I will have to excuse myself, un-
fortunately, because we do expect votes for that markup. But I
wanted to be here to introduce a constituent of mine, whom I am
very grateful for his appearance today, and I look forward to his
testimony.
George Doughty is the executive director of the Lehigh-
Northhampton Airport Authority in the Lehigh Valley of Pennsyl-
vania, and specifically Lehigh Valley International Airport, and
this is a post he assumed in 1992, prior to which Mr. Doughty was
10
responsible for the management of Stapleton International Airport

in Denver, prior to which that he has experience as director of air-
ports in Cleveland, he has experience in the Baltimore-Washington
International, Airport and a number of other major regional air-
ports as well as many different capacities in the aviation industry.
He has been active in many aviation associations.
He is a licensed private pilot, and I know there cant be more
than a handful of people in the entire country with more firsthand
knowledge and firsthand experience in managing airports across
the country, in particular, airports like the Lehigh Valley Inter-
national Airport, which plays such a critical role in the economy of
our entire region.
George, I appreciate all of your input and your willingness to be
here today to share with us your perspective on how the attack and
subsequent federal action has had an impact on airports, particu-
larly ours, but others like it, and I thank you for being with us.
Mr. PENCE. Mr. Doughty is recognized for five minutes of testi-
mony.
STATEMENT OF GEORGE DOUGHTY, EXECUTIVE DIRECTOR,
LEHIGH VALLEY INTERNATIONAL AIRPORT, ALLENTOWN,
PA, ON BEHALF OF THE AIRPORTS COUNCIL INTER-
NATIONALNORTH AMERICA
Mr. DOUGHTY. Thank you very much, Mr. Chairman, distin-
guished members of the committee. It is my pleasure to be here
this morning to represent Lehigh-North Hampton Airport Author-
ity as well as the Airports Council International-North America.
There has been, as we all know, significant impact from the
events of September 11th. Both our airport and other airports have
seen tremendous drops in business and traffic as a result of that
and also as a result of the restrictions that have been placed on air-
ports.
Lehigh Valley International is located in the Lehigh Valley be-
tween the cities of Allentown and Bethlehem which is about 50
miles north of Philadelphia and 80 miles east of Newark. Our pri-
mary market area is about 2.5 million people and we have very im-
portant businesses such as Air Products and Chemicals, Bethlehem
Steel, Mack Truck, Merck & Company, and many others large and
small in the region that depend on our airport to provide service
for them.
Last year, Lehigh Valley handled about a little over one million
passengers. It was a record for us last year. And our business con-
tinued to grow well into this year despite the fact that the economy
was weakening. We have about 120 airport employees that work
for the airport authority, and about 700 employees generally work-
ing at the airport in airport-related and airline jobs there.
The Airports Council International-North America, it is an orga-
nization representing local, regional and state governing bodies
that own and operate commercial airports in the United States and
Canada, of which the Lehigh-North Hampton Airport Authority is
an active member, and I am an active participant having served as
chairman of the association in 1993.
There are three, really three basic ways that we have been af-
fected as airports since September 11th. We have had immediate
11
increases in operating costs as a result of the additional security

requirements that have been placed and law enforcement require-
ments that have been placed on us by the federal government.
There have been service reductions by the major airlines at nearly
all the airports. Its been particular critical for small airports.
That results in fewer travel options for people in our community
and reduces the revenues that airports receive from airlines. Fewer
passengers mean less revenue from parking concessions and other
airport businesses, and to the community facilities that support
airport operation. For Lehigh Valley International Airport, we esti-
mate that over the next year we will see at least a $600,000 in-
crease in costsin airport operating costs, primarily security re-
quirements. The Airports Council International estimates that na-
tionally sincejust in the period September 2001before the pe-
riod September 2001 to 2002, additional security expenses will be
$355 million. That is operations only.
Our revenue losses, Lehigh Valley as an example, we believe will
be about $1.2 million for the next year, and ACI member airports
have lost $185 million for the period just between September 11th
and September 22nd, and they estimate that airports combined will
lose $4.9 billion in the next year, including capital investment
losses. At airports, as you know, there are a number of businesses
that support our operations, including concessions and other airline
and airport supporting organizations. ACINA estimates a $2.3 bil-
lion loss from September 2001 to 2002 as a result of this reduction
in business.
There are several things that the federal government can do to
aid airports, and I would just like to list a few. ACI has submitted
proposals to Congress for assistance to airports. They include:
broadening the rules relating to the AIP program, the Airport Im-
provement Program, and broadening the use of passenger facility
charge revenues to cover some of the extraordinary costs that we
will be experiencing. ACI has also recommended that we seek con-
gressional approval for the increased cost, direct appropriations for
the increased cost in security requirements at airports that were
mandated by the FAA.
I would point out that the $5 billion that was given directly to
the airlines may not flow down through rates and charges to the
airports. The airlines probably will not be excited by sharing that
money with us because they have their own problems. They would
like to see from airports, and we will begin reducing costs and have
begun reducing our costs, they would like to see lower fees. The re-
ality is we will probably have to charge higher fees, and there will
be significant resistance from the carriers to make those payments.
Therefore, we would appreciate, obviously, some action on the part
of the federal government to reimburse airports for the direct cost
of these security requirements.
Finally, there are a number of things that have occurred in the
last several months, additional requirements and various proposals
for improvements to security. One of those was the deployment of
the national guard troops. Airports would very much like to see a
much broader role for the national guard, more flexibility in their
use, which would aid us in taking care of certain security issues
12
at airports that are currently being borne solely by airport police,

and they are overworked and very much strained at the moment.
Finally, in reference to the number of additional security pro-
posals that are on the table, we would hope that Congress would
take the time to make certain that these are rational and effective
proposals, and are not just proposals that are designed to make
people feel good. People will feel good and they will return to avia-
tion if they are really secure, and we would hope that a great deal
of thought is put in place to achieve those kinds of security im-
provements.
Thank you very much, Mr. Chairman, for the opportunity to be
here today.
[Mr. Doughtys statement may be found in appendix.]
Mr. PENCE. Thank you, Mr. Doughty. We will look forward to
questions from the Chair and other members present, and thank
Congressman Toomey again for joining us for however long his
schedule with markup permits.
Our next witness to be recognized for five minutes is David
Wartofsky.
Mr. WARTOFSKY. Well pronounced.
Mr. PENCE. And David is partner and co-founder of Potomac
Aviation Technology Corporation, a research and development mar-
keting firm created to develop technology, federal approvals, manu-
facture and marketing of proprietary airport communications,
weather and surveillance technologies nationwide. Essentially he
works in the area of developing technology that brings artificial
professional intelligence and communications into the aviations
communications environment, which is probably the sum total of
my understanding of that topic.
He has actually literally worked in the area of artificial intel-
ligence since he was 12 years of age, and it ishe is also a private
pilot of both fixed-wing, multi-engine and helicopter.
And so Mr. Wartofsky, it is a pleasure to have you and your per-
spective here, and we recognize you for five minutes.
STATEMENT OF DAVID WARTOFSKY, PARTNER, POTOMAC AIR-

FIELD, FORT WASHINGTON, MD, ON BEHALF OF THE NA-
TIONAL AIR TRANSPORTATION ASSN
Mr. WARTOFSKY. Okay, thank you very much. Even my in-laws
do not quite understand what I do yet, and we have been married
for 14 years.
I wish to thank the NATA for asking me to speak and provide
the venue for this discussion.
A little background: I am David Wartofsky, owner and operater
of perhaps one of the most controversial airports in the United
States called the Potomac Airfield. It is the closest airport next to
Washington, D.C. It is quite literally located between Washington
National and Andrews Air Force Base.
To give you a little snapshot of the setting, Potomac offers a sort
of bucolic setting, minutes from D.C. for all the numerous small
business and services that make up general aviation, of which
there are many on the field. Its a smaller general aviation airport,
120-based aircraft, singles, light twins, propeller-driven aircraft. It
13
is also an R&D lab for some remarkable airport technology that is

affecting airports across the country.
This is a wonderful location, usually. Since September 11th and
to this day, Potomac Airfield remains under 100 percent airspace
lock down. While the airport is technically open, any aircraft that
are actually airborne will be shot down. This is akin to having a
restaurant, that while technically open and serving a delightful
brunch, has armed soldiers at the door with orders to shoot anyone
trying to enter or exit. This has not been great for business.
There are thousands of small businesses at airports like Potomac
either still located within areas of airspace lock down or subject to
some of the other bizarre constraints that have come since the
events of the 11th. All of these businesses are withering on the
vine and they are all actually withering rather rapidly.
As I am sure the NATA and other organizations have given you
lots of information and details on financial disaster, and what have
you, what I am going to do is not take a few moments to read you
more data, but rather I would like to give you a little background
of my position and overview on the situation we are in.
First off, obviously, we should thank the White House, NSC, FAA
and DOD and whoever else was involved with efficiently locking
down the airspace on the 11th. That was not an easy thing to do.
It was the right move. And if you stop to think about it for a few
minutes, it was a very tough move to make, my hat is off to all
the people involved in that action.
Metaphorically, since September 11th, the White House, NSC
and government have been facing, in effect, a roomful of a thou-
sand shouting people, all seeking urgently to have their own hard-
ships addressed. Within the aviation industry, many organizations
and individuals have been barking at the FAA, ultimately for the
NSC to do something. Only recently have these organizations start-
ed to say what that something is.
It is my own belief that some of the early, somewhat bizarre reg-
ulatory actions, and some still existing today, are in some manner
an indication of the governments perhapsovereager willingness
to try to do something in response to all of the barking; but without
adequate time to understand or implement perhaps the most ra-
tional, well thought-out solutions. Somewhat expected and perhaps
even embarrassing actions have been taken.
There are basically two views:
From industry, as these light aircraft cannot do much more dam-
age than throwing a marshmallow at a window, basically let us get
back to business as usual. There is no real security concern.
From the defense standpoint, any act of terrorism can be desta-
bilizing, including the throwing of marshmallows if thrown at the
right window, in the right manner and at the right time. My apolo-
gies to the marshmallow industry.
To implement rational, workable solutions is going to take a lit-
tle time. Even these past recent few weeks the clamor has notice-
ably changed from a we want to here is how to fix it series of
recommendations coming from industry. To this, I say hurrah; at
long last the suggestions are beginning to replace complaints.
The proposed legislation on your table today would offer some
chance of survival for a portion of the businesses, families and de-
14
pendents who are failing financially, and who are standing by as

strong and as long as they can under the remaining airspace and
operating constraints. They need to stand by while these operating
constraints are being evaluated, primarily from a security stand-
point, and you are providing a means for these small businesses to
hold out.
For the time it takes our government to basically fix the airspace
it had to break up on September 11th, you can help both national
security and public security, in effect, by encouraging and assisting
those thousand shouting people. You can help them calm down and
get into an orderly line. I believe this will allow the NSC, the FAA
and others time to understand and to attempt to resolve the needs
of these shouting people in an orderly and rational fashion. Their
security will obviously be the first consideration, and their commer-
cial viability the second.
In the list of moral and ethical priorities for government, after
national defense and the preservation of our freedoms by your own
possible actions today, to help create order and maintain public se-
curity, you have an outstanding opportunity to serve your people
and their government. This, I believe, is one of the highest callings
of an elected body, and I encourage you to do your part.
Thank you.
[Mr. Wartofskys statement may be found in appendix.]
Mr. PENCE. Thank you, Mr. Wartofsky. We look forward to hear-
ing more about those marshmallows during the question and an-
swer session.
Our last witness on this panel is Mr. Quintin DeGroot. Did I pro-
nounce that correctly?
Mr. DEGROOT. DeGroot, we go by.
Mr. PENCE. Thanks. Mr. DeGroot, I appreciate the correction. He
is the owner and the operator of Spencer Avionics in Spencer, Iowa.
Mr. DEGROOT. That is correct.
Mr. PENCE. Has traveled a long distance to be with us today. A
native of northwest Iowa, Mr. DeGroot worked most of his adoles-
cence helping his father with his insulation business. He currently
lives in Sanborn, Iowa with his wife and his four children.
He flew his first airplane at age nine, and in 1982 joined the U.S.
Army as a helicopter mechanic; graduate of Spartan School of Aero-
nautics in Tulsa in 87, and purchased Spencer Avionics from the
previous owners in 1998, and recognized for his valuable practical
perspective as we have heard from others for five minutes.
STATEMENT OF QUINTIN DEGROOT, PRESIDENT AND OWNER,

SPENCER AVIONICS, SPENCER, IA FOR THE AIRCRAFT ELEC-
TRONICS ASSOCIATION
Mr. DEGROOT. Thank you, Chairman Pence and members of the
Subcommittee on Regulatory Reform and Oversight. I would like to
thank you for this opportunity to testify before this committee on
behalf of Spencer Avionics and the Aircraft Electronics Association.
As New York and Washington continue to recover from the
events on September 11th, I wish to express my deepest sympathy
for the families and friends that have lost loved ones in this tragic
event.
15
As a result of the terrorist attacks, many aviation businesses na-

tionwide have suffered unprecedented financial hardships, hard-
ships that are a direct result of the security measures put into
place by the federal government.
The Aircraft Electronics Association represents over 1,100 avia-
tion businesses that, like mine, specialize in avionics maintenance,
installations and electronic systems for general aviation aircraft.
AEA members have been engaged in every level of general avia-
tion, although only nearly 75 percent of our memberships are small
businesses having less than 10 people.
Spencer Avionics is one of those businesses. While general avia-
tion includes many large turbine-powered aircraft, we tend to spe-
cialize in smaller single-engine and light twin aircraft often flown
under visual flight rules.
I am a veteran and father of four children, and until three years
ago I worked for someone else. I now own a small, four-man shop
that my wife and I operate. As a direct result of the grounding of
all the general aviation aircraft, my shop suffered an immediate
nine-day loss, exceeding $15,000, and continues to lose money be-
cause many of my customers do not have access to my shop due
to the temporary restriction regarding the Class B airspace. As a
small shop owner, I have had to cut my own personal pay by one-
third in order to keep my technicians working and the cash flow
flowing.
We are far from New York City and the government security
measures put in place following the terrorist attacks have had a di-
rect effect on mine and other avionic shops ability to operate. Like
many AEA members, my shop draws customers from a relatively
small radius of 250 miles. In my case, this radius includes the Min-
neapolis Class B airspace, which is closed to VFR flights at this
time.
While the government made significant progress in the first two
weeks returning commercial aviation to normal operations, there
has been little or no progress in the past two weeks getting general
aviation and the small business that supports them back into oper-
ation.
The current flight limitation exclude VFR into major metropoli-
tan areas and U.S. travel of foreign aircraft. Airspace within the
United States is divided into six separate categories. Class B is the
highest classification of airspace, below 18,000 foot, with the high-
est degree of positive control of all airborne traffic. There are 28
designated Class B airspaces, typically located around the major
airports in large cities. These Class B airspaces have been closed
to VFR flights since September 11th. The businesses located within
these airspaces have been unable to conduct VFR customers oper-
ations.
The AEA members rely on both domestic and international avia-
tion customers. Domestically, the inability to receive aircraft from
the customer and the inability to return the completed aircraft to
the customer severely crippled the ability of small business to meet
the demands of their customers at normal operating levels. Inter-
nationally, the United States maintenance facilities are recognized
worldwide for their quality work they perform. For many inter-
national operators, these maintenance facilities are the facilities of
16
their choice. The current ban prohibits international customers

from delivering these aircraft to U.S. facilities for their scheduled
and unscheduled maintenance.
Like many AEA members, my insurance provider has notified me
that my aviation insurance will increase dramatically as a direct
result of the terrorist attack. My options are very limited in the
aviation insurance market. There are only three companies that
provide insurance for my shop. In the past two years my insurance
has already increased 56 percent, though I have not had a claim
against any insurance company.
Since the events of September 11th, AEA members have seen on
average a 45 percent decrease in their business with specific mem-
bers suffering much more. I have described the losses that I have
experienced in Iowa. Other AEA members have had similar and in
some case worse losses than mine.
We as a small business owners are not looking for some kind of
a government subsidy. My dad always said if you are not part of
the solution, you are part of the problem. It is not the governments
job to run any business or bail it out of its own mismanagement.
However, the government can help us survive the disaster on Sep-
tember 11th and the federal governments security measures imple-
mented as a result of the disaster by tax relief or by making low
interest loans available.
To help the small aviation small business return to work, the as-
sociation requests from this committee:
One, encourage the FAA to develop a plan that would allow for
delivery of U.S. registered aircraft to repair stations located in the
28 metropolitan areas, and hence Class B airspace;
Two, to encourage the FAA to develop a plan to allow delivery
of foreign registered aircraft to repair stations;
Three, to expand the boundaries of the disaster area to include
aviation businesses that incurred financial hardships as a direct re-
sult of the federal security measures put in place following the ter-
rorist attacks in New York and Washington; and
Four, to investigate, and if possible, stabilize insurance pre-
miums charged to general aviation companies by the insurance in-
dustry.
I appreciate the opportunity to testify before this subcommittee.
On behalf of Spencer Avionics, my employees and the members of
the Aircraft Electronics Association, thank you very much.
[Mr. DeGroots statement may be found in appendix.]
Mr. PENCE. Thank you, Mr. DeGroot.
And we will commence with questions of the panel. The Chair
will have a question for each of the witnesses, and then we will
yield to the gentlelady from the Virgin Islands for any questions,
and then we will do another round if we are up for it and they are
up for it.
Let me thank all of you for outstanding presentations, very in-
formative and very helpful to my understanding in this area.
Beginning with Congressman Coyne, you raised an issue that our
last witness, Mr. DeGroot, also raised, having to do with expenses
going up and specifically, and I do not remember from your testi-
mony, it appears in my notes, if you specifically referenced insur-
ance costs.
17
If you can elaborate just briefly from your perspective how seri-
ous is the type of increase in aviation insurance. We are talking
about or heard 200 percent suggested or hypothesized. Will it be
that more or less otherwise? And what is driving that?
Mr. COYNE. Thank you very much.
First of all, I should explain that in aviation insurance there are
different products that different aviation companies buy. These
range from what is typically called the general liability, hangar
keepers liability, hull insurance on aircraft, operational insurance,
renter insurance, and war risk or terrorism insurance, just to name
a few.
Each of these products, each and everyone of them are expecting
dramatic or have already experienced dramatic increases just in
the past 30 days. The most extreme effect, as you might expect, has
been on what is typically called war risk insurance.
Of course, it is a little hard for me to understand what additional
risk with regard to war or terrorism a facility in Iowa or Duluth,
Minnesota, or St. Croix, Virgin Islands really faces.
But really, I think, it is largely an issue of the insurance indus-
try trying to spread the terrible loss that they have endured over
the last 30 days among anybody that they can findanywhere they
can find a wallet, a live wallet. And so we are expecting to see in
the war risk insurance area increases of up to perhaps as much as
a thousand percent.
One specific example I can give you, one of our members had a
premium of $2,300 for war risk insurance. The first week after the
disaster they received a letteras virtually everybody in aviation
has done, I think, without exceptionfrom their insurance policy
saying that their previous war risk insurance is now void. And if
you want to get new war risk insurance, give us a call, and we will
give you a quote if we can get you the insurance at all. The one
that I was telling you about that was a $2,300 premium last year
was able to get a quote of $57,000. So that is an incredible in-
crease.
Similarly, we typically are seeing increases in general liability of
around 50 percent over the last 12 months versus this year. Hull
insurance in some cases, not only is the premium being tripled or
doubled, but the coverage is being cut in half. We might have been
able to get a $10 million policy last year. We are lucky to get in
some cases a $5 million policy. Some companies are only quoting
a million dollars coverage. And the most extreme example that I
have seen is one company that had a $50 million war risk insur-
ance policy was reduced to $1 million, and the premium for it was
$200,000.
So we have very, very irrational market responses right now in
insurance, and in many cases it is leading people to make the ter-
rible decision to not carry insurance, which obviously does not help
anybody, or in other cases making the decision to just go out of
business.
Mr. PENCE. Thank you.
Maureen Tarascio, your presentation about your experience at
Republic Airport, I think I heard you right to say that there were
500 operations a day prior to
Ms. TARASCIO. Almost 600 actually.
18
Mr. PENCE. Almost 600 a day down to 26.

Ms. TARASCIO. They were down to 26 until we opened on October
6th. We do have 40 percent operational status back at this moment
from Saturday, but we are still 60 percent down. As I said, we still
have restrictions. The VFR rental pilots, VFR91 cannot go in or
out yet.
Mr. PENCE. Great, that is helpful.
Let me ask you two very quick questions, if I can. Number one
would be, how would you have characterizes the state of your busi-
ness prior to September 11th? Was it a good year, mediocre? I grew
up in a small business family, its always a bad year. But I mean,
now
Ms. TARASCIO. For the flight school, we were very busy this sum-
mer.
Mr. PENCE. Okay.
Ms. TARASCIO. This was our busiest year. This was our first year
that we completed a full year in our new facility, so we were very,
very busy with the flight school. So of course, we went from being
very busy in the flight training.
The charter was on the slow side. That picked up a little bit
since because people could not get around with the airlines.
But as far as the flight school goes, of course, that went from
being very busy to no activity.
Mr. PENCE. Would you characterize, based on conversations with
colleagues and friends, would you characterize the health of gen-
eral aviation around the country to be relatively the same as
yours?
Ms. TARASCIO. Well, as far as I know, talking to other entities,
everybody pretty muchwell, I think everybody was closed down
for at least a week around the country, and there were, I believe,
100 airports affected like myself that are still affected at this time
around the country.
But in talking to people, everyone took a very big hit. It is going
to be slow coming back. We are still, like I said, not fully oper-
ational, and it is a real concern. There are many, many people that
are at the point of thinking about closing their doors.
Mr. PENCE. Last question from the Chair, what do you think is
the most effective thing that we can do?
There has been some talk about legislation that has been pro-
posed and is in some part the topic of this hearing.
One of the things that we did in thewhat gets called the airline
bailout bill for the major commercial airlines was we addressed the
issue of insurance, in part. Should the federal government become
involved in providing or facilitating the provision of insurance? Or
would it be more significant to see deferments of principal and in-
terest payments on certain loans?
Ms. TARASCIO. Well, I think, first of all, if we could regulate. Un-
fortunately, I think that the insurance company is taking such a
loss, they are going to pass this on to us. If we could regulate what
the insurance company, cap it, maybe what they could charge us
because it just seems that in times like this they are going to, of
course increase their rates to the point where it wont be affordable
for us to operate. That is one thing that we would like to see.
19
The second thing is we are in contact with FEMA at Republic

Airport. We have been consideredthey brought Suffolk County
into the FEMA package, but they are only talking loans. We real-
lywe have kept our employees. I did not lay people off, but of
course, it was very difficult. There were a lot of people laid off at
Republic Airport. But we are looking for funding in form of grants.
We would prefer to have theof course, we want the grants be-
cause we had to keep the insurance payments going, the loan pay-
ments going, and all the other expenses to keep us operational, and
of course, be ready to operate any moment when the airport was
open.
And I have to be honest with you. We were not told when the
airport was going to open, so we were waiting for any day type of
thing. And we just did not want todid not want to lay our staff
off so that were not ready to return to business.
Mr. PENCE. Okay. Mr. Doughty, during your testimony, I was
trying to keep up with some of your recommendations from Air-
ports Council International and others. You said that essentially
from your perspective there were three ways that general aviation
or smaller airports like Muncie, Indianas airport that I represent
have been affected. And additional operating costs, I caught, reduc-
tion of revenue was the other, but I missedwhat is the third big
pillar in that
Mr. DOUGHTY. Well, in the case of, and I guess I just divided the
loss of revenue into two categories.
Mr. PENCE. Okay.
Mr. DOUGHTY. Basically, it was in our case airline revenue loss.
We are a small air carrier airport. We lose revenues from airline
and loss of flight opportunities, loss of schedule. And in our case
we may have lost 1015 percent of our flights.
Very small airports with only one airline could have lost all their
service. The domino effect of that, obviously, is all the other ways
you get revenue from those people, like the parking lot land the
rental cars and all that.
Mr. PENCE. Okay.
Mr. DOUGHTY. That revenue is a secondary impact.
Mr. PENCE. And your thought about recommendations, which
this committee is certainly very interested in, greater flexibility in
the Airport Improvement Program to allowcould those resources
be used to address some of the new security strictures being im-
posed on airports.
Mr. DOUGHTY. It could be, I think.
Mr. PENCE. You used the number of $600,000.
Mr. DOUGHTY. Mr. Chairman, I think it could be in a limited way
by broadening those rules to allow airports to include additional se-
curity items that are not necessarily on the list of eligible items.
And ACI has made a specific proposal on that.
Also, the PFC revenue which we receive, which is the $4.50 or
$3, depending on what airport, from passengers, from each pas-
senger, if that could be broadened. And there probably is more
flexibility with that money to even include operating expenses
being funded by PFCs as well.
That would be helpful. It would not be a panacea by any means,
but it would be helpful.
20
Mr. PENCE. Mr. Wartofsky, with others indicating in their testi-

mony that they are maybe back to 40 percent, my heart really goes
out to Potomac Airfield and to what you are dealing with, and obvi-
ously, a high national security area. I want to be very, very clear
on your testimony because we did just reopen Reagan National Air-
port to some extent.
Mr. WARTOFSKY. Right.
Mr. PENCE. Is it your view that a certain type of general aviation
does not represent a significant security risk the way a large com-
mercial airline does?
And I want to be very cautious about not seeming flippant
Mr. WARTOFSKY. Sure.
Mr. PENCE [continuing]. Or suggesting that you were being flip-
pant, but you have such a background in this area, I want to make
sure I understand.
Mr. WARTOFSKY. Absolutely. There are a couple of dimensions to
it. Obviously, the day after this event I naturally asked a close
friend who is in defense intelligence whether I should move my
wife and kids to the Outer Banks, a logical question. One starts
thinking about these things. We were talking about the practical
threat that a light aircraft represents.
The practical threat the light aircraft represents is in fact so lim-
ited by its payload, you might as well say the obvious, gas, biologi-
cal or explosive, that these aircraft cannot carry enough to actually
accomplish anything tactically significant.
Another friend in the security industry, I guess you would call
it that, made the counterpoint in another discussion, that any act,
however trivial, can be highly destabilizing if it makes people
scared.
I believe that part of what the national defense and the National
Security Agency are wrestling with is that 98 percent of the public
has a perception of light aircraft, regardless of weight or size, per-
ceive light aircraft as being something hazardous. There needs to
be some kind of procedures that convey a sense of positive control
within what are considered these high-risk areas, and there are a
number of things being discussed now.
One of the other issues is that historically the FAA, while it has
had jurisdiction, has not actively managed the whole Part 91 ques-
tion. The FAAs primary mission has obviously been airlines. And
so, for example, one of the issues is a Cessna 172 weighing 2,300
pounds is operating out of the same category as a corporate Gulf-
stream 3. And if you release one, you release both.
One of the problems that is being discussed at National is how
do you preclude a bin Laden airlines Gulfstream 3, owned by nomi-
nees, from instead of landing at runway one at National, instead
it ends up doing a touch and go and a barrel roll into the White
House. And so how do you draw a distinction between these things?
I do not believe that there is any easy answer. While a number
of the government agencies are trying to come up with solutions
that, I believe the phrase is vetted by all the related trade
groups, I do not think a solution can come that is going to make
them all happy. You will never get them all approved. The FAA
wants to be cautious to try and get everyone happy before they
submit something, but I just do not think it is going to get there.
21
The fastest way to implement things are actually procedural.

There are procedural things discussed that would convey, in effect,
an absolute positive control over aircraft before they depart. There
are methods for doing that, that in effect can set an iron curtain
around the 25 miles for anyone that is not already known, has not
already been identified.
Whether that solves the question of the Gulfstream 3 going into
National Airport, I just do not know. It depends on, in effect, where
you draw the lines. That is part of the problem; it is sort of all or
nothing in the whole Part 91 world right now.
There have been a number of things that have come out, these
sort of weird 25 mile, then 18 miles, then 6,000 pounds, then 4,000
pound restrictions, and in a sense what people are doing is they are
arguing about what weight of what bicycle should be permitted
how close to the White House; it is really sort of irrelevant. And
ultimately it is going to require some positive control procedures,
which there are some actually rational and relatively easy to do,
but there are some staffing questions really at the FAA flight serv-
ice station level, and there are going to be some pissed off people,
to put it bluntly.
But I think the National Security Council has probably had good
intentions here, but I think their mission is national security, not
economic recovery. The only thing that is going to crack this open
is a rational series of steps coming from the Defense Intelligence
Agency that are acceptable both in terms of a security standpoint,
and also in terms of reassurance to the general public.
Mr. PENCE. Thank you. That is helpful.
I am going to come back to Mr. DeGroot, but I want to yield to
Dr. Christian-Christensen, Congresswoman from the Virgin Is-
lands, for any questions she may have.
Ms. CHRISTENSEN. Thank you, Mr. Chairman. And it is clear that
the issue of the Class B airspace restrictions is one of the major
ones that is of concern to everyone, and I would be happy to join
with you in writing to or meeting with Secretary Minetta and the
FAA administrator to explore that issue more.
We did pass what some refer to as a bailout and others refer to
as a financial stabilization package for airlines, and what it does
is it provides funding to make up for the losses since September
11th, and also it would provide for any increasesto pay costs of
increases in insurance to airlines.
For those of you who deal specifically with aircraft, does it get
to smaller airlines and people who do airline rentals at all?
Mr. COYNE. The short answer to your question, Congresswoman,
is no. It is possible theoretically for an airline not to pass any of
the funds through, but to conceivably pass through some indem-
nification on war risk insurance through to a contractor, unfortu-
nately, the airlines to this date really have not done that except in
a very, very few limited occasions, and mostly only to their very
largest contractors.
But to the thousands and thousands of businesses across the
country who fueled, let us say, an American Airlines flight that
lands at St. Croix, that contractor is not getting any relief, not get-
ting any funds, essentially has gotten nothing, zero, out of that $15
billion that was passed in that legislation.
22
And of course, at the time we and everybody else in the industry

came to Congress and said cannot we include in this legislation a
paragraph, a sentence, a chapter that would provide some relief to
employees, to contractors, to others. And as you know at the time
there was a great rush to do something immediately, and there was
a lot of pressure to just sort of not open the bill for any amend-
ments or anything.
Ms. CHRISTENSEN. Right.
Mr. COYNE. And at the time most people that I talked to here
in Congress said, well, there will be an opportunity next month for
the Small Business Committee to deal with the concerns of small
business, for the aviation subcommittee to maybe deal with other
issues, tourism and so forth. And we here are really looking to you
to provide that legislative product and output. And without it, I do
not think we expect any relief from that earlier legislation at all.
Ms. CHRISTENSEN. Does anyone else want to respond? Okay.
That opens up two other questions, referring one to the transpor-
tation committee and they are looking into the use of airport trust
fund monies to provide some assistance to airport-related busi-
nesses.
Mr. Coyne, or anyone else, what would be most helpful for the
transportation committed to provide for you?
Mr. COYNE. Well, certainly with regard to the expenditures that
are going to be expected in the area of security the costs that these
many businesses, whether it is a new badging or identification sys-
tem, or a new electronic background checks, or new fences, or new
screeners or whatever, it absolutely makes sense that the aviation
trust fund should be used to finance these security expenditures,
just as I am sure the airlines are expecting the aviation trust fund
to pay for new security expenditures that they may face in terms
of baggage screening or what have you.
However, for the core issue, which is the losses that were en-
dured, the airlines, of course, got $15 billion in grants and loans
to cover what essentially was three days of being out of business
because of federal action.
Our industry, many of them are still out of business entirely, as
Davids case, and many others, because ofsolely because of the
actions of the federal government. And if there is an argument that
the airlines should get $15 billion for three days of being out of
business, what is the argument that is fair for people like these
businesses who are still out of business and in many cases, I am
sure in Davids case there is not a single person anywhere in gov-
ernment that will tell him if he will be able to come back in busi-
ness tomorrow, a month from now, a year from now, or ever.
And so if they will not give us that answer, and they are the ones
that have caused us to go out of business, and they gave all that
money to the airlines, how can they not, and how can government
not respond to these same businesses who are hurt much, much
more severely?
The airlines can go borrow money. They can go do all sorts of
things. There is nothing, nothing, zero, that these businesses can
do except reach into their own pockets and take money off the table
that was going to their children or whatever to keep their busi-
23
nesses afloat. They are looking to government as the only hope for
relief.
Ms. CHRISTENSEN. We had a hearing yesterday at the full com-
mittee with the Small Business Administrator, and one of the solu-
tions that we are looking at is making affected businesses eligible
for low-cost or no-cost economic injury disaster loans.
How far would that go to help? Maybe somebody else.
Mr. COYNE. Somebody else, yes.
Mr. WARTOFSKY. Okay, I can give you a little reaction. We actu-
ally own the underlying airport, and then there are numerous serv-
ice businesses on the field. How you connect those revenues to the
service businesses on the field, I do not know, frankly. It is easy
to identify. The general aviation industry, however, is split into far
more layers than just the handful of airlines.
Mr. WARTOFSKY. And how you actually try to cover all of those,
how you would identify them. I think as a practical matter by the
time you have figured it out a lot of their phones will be discon-
nected.
Mr. DEGROOT. I would just like to say that low-interest loans
would help us get through this short time. I think general aviation
will make a comeback eventually, but we need a bridge to gap
for this gap from the shutdown to where we can get our businesses
back on their feet again. It does not necessarily have to be a no
I mean, a no-interest loan would be great, but I do not think the
government can afford it.
Ms. CHRISTENSEN. If we were to reduce the interest rate, what
might be a workable?
Mr. DEGROOT. One percent would be great. [Laughter.]
No, but I think most businesses would be happy with maybe
three to four percent. That would make it a manageable number
for us to deal with on a monthly basis.
Ms. CHRISTENSEN. Okay. And the disaster loan is at about three
or fourabout four percent, if we were able to extend that.
Mr. DEGROOT. That would be great for my business personally.
I do not know about Davids business.
Mr. WARTOFSKY. Yes.
Mr. DEGROOT. He needs to get flying again is what he needs.
Mr. WARTOFSKY. The airspace is the critical thing. Right now the
suspension of all airspace is sending a very strange message to peo-
ple. It is perfectly reasonable to get back to your lives, but oh, no,
oh, God, not around Washington, we will shoot you down.
We saw about 20 aircraft depart the first night. The clearances
were quite literally, and I was dealing with Washington departure,
The aircraft must be off the ground 22 minutes after the hour, and
are voided 25 minutes after the hour. If it takes off 26 minutes
after the hour, it will be shot down.
These procedures are terrifying people. I was at an FAA head-
quarters meeting, they are trying to figure out what can be done,
and one of the things I mentioned is that if they just issue a press
release that at least they are trying to address this, and try and
reduce the level of terror which quite literally inadvertently has
24
been caused by government action within the industry these kinds

of things can go a long way.
There are a lot of things the FAA and the DOT just do not have
jurisdiction over now.
Ms. Congresswoman, if I may, I would like to really stress these
airspace issues one more time. We really have not talked about it
much, and I know it is not normally the purview of this committee.
But each and every individual in Congress can help solve this prob-
lem working with the White House, the FAA, DOT, as you men-
tioned.
The situation that involves the Virgin Island is on the face of it
absurd. It is merely absurd. It seems to meI hate to say this but
it seems to me that the FAA when they rushed to enact the air-
space rules regarding foreign aircraft coming into the United
States, they acted as though Puerto Rico and the Virgin Island
were foreign countries. And they make it easier to get to the
United States from the Bahamas
Ms. CHRISTENSEN. Yes.
Mr. COYNE [continuing]. Than they make it to get from the Brit-
ish Virgin Islands to St. Thomas which is what, 1525 miles, or
just to get from Puerto Rico to St. Croix, both of which are part
of the United States.
Ms. CHRISTENSEN. Exactly.
Mr. COYNE. Somebody has got to go to the FAA and say that this
is fundamentally wrong, stupid, and easily fixed tomorrow. They
could issue a NOTAM tomorrow to deal with these international
issues all around the United States that would solve this problem
because it does not do anything to improve security at all.
Mr. WARTOFSKY. If I may, I think actually the FAA understands
that. The problem is that no one is paying any attention to the
FAA either.
Ms. CHRISTENSEN. Okay.
Ms. TARASCIO. Can I say one thing about the
Ms. CHRISTENSEN. Sure.
Ms. TARASCIO [continuing]. You were asking about the low-inter-
est loans.
Like I said, we have been offered something by FEMA at Repub-
lic, and we had a meeting the other day, and the people that came
were very disheartened. They were very upset. We have helicopter
businesses that are not able to operate at all. We have, like I said,
flight schools that we are still not fully operational right now. We
are still not allowed a VFR91. And everyone estimates that it is
going to be about six months until we get back to normal status,
normal operations.
And for us to have to take a loan and repay money that we have
lost in that time period, which is going to be great, I mean, like
I said, we are losing $200,000 per day amongst all of us, it is just
phenomenal for us to do that. We need to get funding to put is back
where we need to be, and we need to get the airspace reopened so
that we can start getting back the business that we have lost, oth-
erwise it is a band-aid fix.
Ms. CHRISTENSEN. Right. And I hear urgency.
Ms. TARASCIO. Yes.
Mr. WARTOFSKY. Yes.
25
Mr. PENCE. Before everything is lost.

But one of the things that we are also proposing, I was just re-
minded, is that delaying the payments of those loans underthat
would be 3011, under H.R. 3011, for at least a year.
Do I still have a little bit of time?
Mr. PENCE. Most certainly.
Mr. WARTOFSKY. Oh, I was just going to say, you know, the
terms of the loans, the terms of the capital, or whatever, is almost
secondary. One of the questions is simply administrating it.
I might suggest that there, I believe, 14,000 airports in the
United States, of which only 3,500 are eligible for AIP. In the meet-
ing yesterday, I was informed that the FAA feels it is an adminis-
trative matter for them to decide that the other airports can be
made eligible for AIP. Right now they are cutoff.
I would also make the suggestion that the state aviation admin-
istrations, are in fact the closest agency to the airports and the op-
erations within a state, and that rather than have the FAA man-
age this, which is used to dealing with airlines and commercial air-
ports, that you actually get the state aviation administrations in-
volved with this because they know what is going on at the grass
roots level. The FAA is actually very far removed.
Mr. COYNE. If I could make one final point very briefly.
It has sounded, listening to us talk today, as though we are only
trying to help these businesses for their own perhaps selfish need
or self-centered need, but it is not that at all. I mean, if these busi-
nesses are allowed to go out of business, the whole community suf-
fers.
I mean, if Bulky Aviation is not there atwhat is it, Alexander
Hamilton Airport?
Ms. CHRISTENSEN. It is now Henry Rohlsen Airport.
Mr. COYNE. Okay. If that is not allowed to exist there, then the
ability of that community to have the benefits of our air transpor-
tation system are forever gone; same thing for all of these airports.
So we are not just doing this for the benefit of the businesses that
have faced bankruptcy, but for the broader disaster impact on the
citizenry as a whole.
Ms. CHRISTENSEN. Thank you.
I just wanted toI did not have a question for Mr. Doughty, but
I just wanted to say that I have been put under some pressure to
appeal to my port authority executive director to lower fees, and
you have helped me to understand why he is putting up the resist-
ance. I thank you for helping me to understand the other side of
the issue.
Mr. DOUGHTY. Airlines have actually asked us to put our bond
ratings at risk, put our own business at risk to help them and
lower fees to them. And that pressure is going to be severe, par-
ticularly on very small airports that may only have one airline, be-
cause that airline can simply say to the board we are pulling out
if you do not give us 20 percent off the landing fee. And it is a dif-
ficult political situation for many small airports.
Ms. CHRISTENSEN. Yes.
Mr. Chairman, I do not have any other questions. I just wanted
to enterfrom my small district, I have five letters dealing with
small airlines and airline issues and Part 91 and Part
26
Mr. DOUGHTY. That is alright, even the FAA finds those con-
fusing.
Ms. CHRISTENSEN. Yes, and the B airspace. So I would like to
enter them for the record.
Mr. PENCE. Without objection.
[The information may be found in appendix.]
Mr. PENCE. Thank the gentlelady from the Virgin Island, and we
will enter those into the record of this hearing.
One final question for this panel before we take a five-minute re-
cess and reconvene with our second panel, to Mr. DeGroot who
clearly, I think, traveled the farthest today and for which this
Chair is very grateful.
You are also a veteran?
Mr. DEGROOT. That is correct.
Mr. PENCE. And there has been a lot of talk about regulatory re-
form at the FAA to address the economic struggles that we have
heard in evidence today. But any specific regulatory changes this
subcommittee should look to encourage that would not compromise
for your perspective as a veteran national security concerns?
Mr. DEGROOT. Well, when I was in KoreaI was talking to the
other people here before this meetingwe had corridors that went
over Seoul, and they worked for us in the military, and we also had
private aircraft that had to fly down the same corridors.
If we could get some kind of a wide corridor to at least get these
guys out to a training area to do some flight or get out to get their
VFRs completed. I mean, Minneapolis, there is nothing after Min-
neapolis besides my shop. [Laughter.]
But if they get a corridor to come out of that Minneapolis or
come into Minneapolis, I think that is something that the FAA or
the ATC could control fairly easily and get these small aircraft fly-
ing.
But if they have this fear that they are going to be shot down
out of the sky if they go out of this corridor, I myself probably
would not fly either. I am a pilot. So I think they have to make
these corridors wide enough to where we can get the airplanes in
and out, and not have the fear of doing something wrong at the
same time.
Mr. PENCE. Okay, very good.
Let me thank all of the panelists. I know I speak on behalf of
Congresswoman Christian-Christensen when I say this has been
very illuminating, and obviously each of you acquitted yourselves
extremely well, and certainly motivated these members in this sub-
committee to become very active in this debate.
I will publicly say that I will take my colleague up on her offer
to address an urgent letter regarding Class B airlines to the FAA
and to the administration, and we will look forward to collecting
more colleagues signatures on that issue.
With that, we will take a five-minute recess, and be back; ask
our second panel to go ahead and head to the table, and we will
be in recess for five minutes.
[Whereupon, a recess was taken.]
Mr. PENCE. The hearing of the Subcommittee on Regulatory Re-
form and Oversight entitled September 11, 2001: Are American
27
Small Businesses Still Grounded, we will reconvene after a brief re-

cess.
I thank the second panel for joining us, and I am anxious to hear
your remarks. I trust most of you were in the room as we explained
the ground rules of five minutes of remarks with an eye on the lit-
tle light box in front of you. And both I and my colleague and any
other colleagues who join us will reserve our questions until after
each of the panelists have testified.
I will make mention of the fact that we are anticipating votes
after 12:15, in which event we may need to either recess or even
possibly adjourn to accommodate what should be a busy day of
votes on the major legislation at the Capitol.
Bonnie Adams is our first witness in this panel, of Lewiston
Travel Bureau. She is an active member of the American Society
of Travel Agents; has owned and operated her own travel agency
for the past 26 years. In addition to her work as president of the
Lewiston Travel Bureau and member of the ASTA Subcommittee
on Government Representation, Ms. Adams is a member of the
Small Business Administration Maine Advisory Board. She has
served as a White House delegate on small business, president of
the Maine Chapter of ASTA, and chairman of the ASTAs National
Legislation Committee.
She brings enormous credentials and daily practical experience
to the struggles that small businesses are facing in the wake of
these events, and is recognized for five minutes of important testi-
mony.
STATEMENT OF BONNIE ADAMS, PRESIDENT AND OWNER,
LEWISTON TRAVEL BUREAU, LEWISTON, MAINE, ON BEHALF
OF THE AMERICAN SOCIETY OF TRAVEL AGENTS
Ms. ADAMS. Thank you very much. Thank you, Mr. Chairman
and Ms. Christensen, for the opportunity to speak to you on behalf
of the American Society of Travel Agents and the nations travel
agents.
I am a travel agent. I have owned and operated my own travel
agency for the past 26 years. My agency is a prototype of the aver-
age American travel agency with about 3 million gross sales per
year.
Prior to September 11, I employed six full-time people, all ac-
tively engaged in the promotion and sale of travel services. Since
September 11th, the agency has had a negative cash flow of
$32,000. I continue to lose $4,000 a week.
My story is typical of what is happening to travel agencies across
the United States and in the territories. I have laid off three of my
employees, and have not drawn a paycheck for myself since Sep-
tember 11th. I have plunged every penny I have into my agency
just to keep my doors open.
I am still in business in large part because I have been able to
obtain the forbearance of others. My landlord has agreed to defer
rent payments for three months. He gave me free lights and heat.
My bank has deferred loan payments for two months. My local
credit union agreed to defer my car payments.
Mr. Chairman, unfortunately, all that generosity and cooperation
is not enough. I have at best three weeks left to keep open, after
28
which time I will lose my career of 33 years, my business, the roof

over my head, the cars I drive, and every penny I had in savings.
This is my story, but it could be anybodys story who owns a
travel agency in the United States today. Indeed, many travel
agencies across the country have been less fortunate than mine,
and are already out of business.
On September 11th, the travel agent industry was, just like the
airlines, already struggling with a severe economic problem when
the terrorist attacks brought a halt to the sale of travel in all
forms. New business stopped and has not yet begun a significant
recovery.
The details of the financial losses are set out in the written testi-
mony and the exhibits. For the period through the end of 2002,
ASTA estimates the total loss for all product lines will exceed $4
billion.
It took 18 months for travel to return to normal levels at the
time of the Gulf War. This time, it can be expected that any modest
rebounds in business will be dampened and that we will again ap-
proach that of the ground stop days as we enter new phases of our
national response.
The average number of agency employees in a location was six,
just like my agency. In normal times, these small businesses han-
dle an enormous volume of air travel. Through August of this year
travel agencies sold more than 48 billion in airline tickets, account-
ing for 127 million airline sales transactions. This business has
shrunk to almost nothing since September 11th.
This is normally the peak season for holiday bookings. That busi-
ness is at a standstill. Large group bookings made for future travel
have cancelled. The details of a small sample of these stories are
set out in Exhibit 1 to our written testimony.
We continue to receive similar stories from around the country.
Travel agents and at-home retailers of travel services number
about 300,000. ASTA estimates job losses in the hundred thousand
range if immediate action is not taken to help them.
Travel agencies do not have cash reserves or other assets to use
as collateral for regular bank loans. The federal government is
where we have to turn. We have no place else. If we do not get an
immediate cash infusion in the form of no-interest or low-interest
uncollateralized disaster loans that are below the current SBA Eco-
nomic Injury Disaster loan level, we will all disappear and lose our
assets and be forced into business and personal bankruptcy.
We ask that such loans are industry-based versus regional or
size. The loans should be based on ability to replay and have loan
forgiveness for agencies on the verge of bankruptcy. We seek loan
abatement on both interest and principal to help travel agents get
back on their feet. I am pleased to say that these elements are con-
tained in Representative Vela zquezs bill H.R. 3011.
As tragic as that is for us as individual Americans, failure to
pass immediately such legislation predicts an even larger tragedy.
If we have learned nothing else in the past few weeks, the coun-
try has, we think, come to understand the way in which the entire
economy depends upon air transportation and upon the travel and
tourism sector generally. The impairment of the air transportation
29
sector threatens to move swiftly from a ripple effect to a tidal wave

of economic destruction sweeping across this entire country.
If the public loses the ability to use the travel agency distribution
system to access the air transportation system and the rest of the
travel and tourism enterprise, the consequences will be certain and
unavoidable. National economic recovery will be impaired for years
to come by our failure to restore the confidence of the public in not
only the security of travel, but also their confidence in the experi-
ence of obtaining and using travel services.
Travel agencies, most all of whom are very small business, ar-
range 75 percent of air travel bought by Americans today. The pub-
lic uses travel agencies because they provide what the public needs
in the way of information, counseling and services. There is no
practical or economic way the airlines or other travel sectors can
duplicate this service.
During the heartbreaking days immediately following September
11th attacks, American travel agencies were there for their clients
as they were there for others as well. Across the country travel
agents were in their offices trying to help many thousands of peo-
ple stranded by the nationwide airport closure. Many of them pro-
vided free assistance to people who had bought their tickets on the
internet had no one else to contact and no place to go for help.
Travel agents performed these services; they were the only people
who could, and at the same time they watched their businesses col-
lapse. Many agencies report gross earnings for the week, including
September 11th, of less than $50.
It is a fact that in this unprecedented situation there was no sub-
stitute for the travel agent for tens of thousands of people who
needed our help. The services of professional travel agents with ex-
pertise in travel options are going to be crucial to bring the public
back to the airways. Consumers are going to want and need to talk
to real people, preferably someone they know and trust with cur-
rent knowledge of the system, the new rules and the requirements
for achieving safe and fast travel.
National economic recovery can be delayed for a very long time
if travel agencies are not there to connect and serve the customer
and the airline.
Given the magnitude of the short-term losses and uncertainty of
near-term recovery, we seek $4 billion in no interest or low inter-
est, noncollateralized loans to be made available to travel agencies
immediately. These funds will help assure that irreplaceable travel
agency services will not be cut off to the public when they need
them the most.
Finally, ASTA thanks the members of Congress who have lis-
tened to the travel agency community in their time of need. Your
immediate actions will help us get back on our feet, and we will
help you get America moving again. ASTA appreciates the oppor-
tunity to present its views and remains at the committees disposal
to assist you in any way.
[Ms. Adams statement may be found in appendix.]
Mr. PENCE. The Chair thanks Ms. Adams for a very moving pres-
entation, and appreciates the difficulty personally in traveling here
from Maine in a time of real duress in your professional life. Very
valuable. We appreciate it very much.
30
We will move to our next witness and encourage some attention

to the five-minute rule. I was not going to gavel Ms. Adams but I
will gavel any one of you fellows. [Laughter.]
And in the interest of fitting everyone in before we might have
to go to vote. Bill Swift is the president of Business Traveler Serv-
ices headquartered in Atlanta, Georgia. His company provides
products and services at Hartsfield Atlanta International Airport,
LaGuardia International and JFK.
Mr. Swift has a 20-year track record in airport concessions,
which is obviously an area of the small business sector profoundly
impacted during these days. Prior to establishing his own business,
he served in several senior positions with Dobbs Pascal Midfield
Corporation with management responsibility for 105 concessions in
Atlanta.
He is testifying today on behalf of Airport Minority Advisory
Council, the only trade association in the country that focuses spe-
cially on airport small business matters, and he is vice chairman
of that organization currently.
And William Swift is recognized for five minutes.
STATEMENT OF WILLIAM H. SWIFT, PRESIDENT, BUSINESS
TRAVELER SERVICES, INC., ATLANTA, GA, ON BEHALF OF
THE AIRPORT MINORITY ADVISORY COUNCIL
Mr. SWIFT. Thank you. Good morning, Chairman Pence, Con-
gresswoman Christensen, and Linda Moore, Chair of AMAC.
I am a business owner and CEO and president of Business Trav-
eler Services. I have been involved with the airport industry for
nearly 25 years, first as the director of purchasing for the City of
Atlanta under Mayor Maynard Jackson; now as a concessionaire
with operations at Hartsfield Atlanta International Airport,
LaGuardia International Airport, JFK International Airport, Ra-
leigh-Durham, Cleveland Hopkins, the two Houston airports, and
Jacksonville, along with Augusta.
I am also testifying today as the first vice chair of the Airport
Minority Council know as AMAC. AMAC is the only organization
in the country that has dedicated its sole mission for the last 13
years to ensuring that minority, women-owned and disadvantaged
business enterprises participate in the economic opportunities at
our nations airports. Our members operate food, beverage, serv-
ices, retail concessions, provide professional services and perform
infrastructure development contracts at U.S. airports nationwide. I
hope that I can impress upon you the urgency of the need for con-
gressional action to help these businesses sustain during this pe-
riod of crisis.
For the record, Mr. Chairman, AMAC is supportive of H.R. 3011,
the bill introduced last week by your colleague Congresswoman
Nydia Vela zquez, the ranking member of the full Small Business
Committee. We are very supportive of its purpose to help stabilize
affected firms and appreciate the considering introducing legisla-
tion to address this issue.
We are also aware that similar legislation has been introduced
in the Senate separately by Senators Kerry and Bond, the chair-
man and ranking member, respectively, of the Senate Small Busi-
ness Committee. We are most grateful for the recognition of the cri-
31
sis affecting small firms; however, I stress that this is an emer-

gency situation which requires prompt congressional action.
Today, hundreds of small disadvantaged, women and minority-
owned businesses are in jeopardy of closing their doors as a con-
sequence of sharply reduced sales. This is particularly the case for
airport DBEs and other airport commercial tenants. The economic
peril is a direct product of the federal shutdown of airports for a
time, as well as the impact of new increased security measures,
other procedures, not to mention the overhead costs associated with
existing leases and contract arrangements and debt service.
We do not question the necessity of the governments action. In-
deed, to the contrary. AMAC members understand and strongly
support the measures to enhance safety and confidence of the trav-
eling public. However, it is very important for Congress to under-
stand and acknowledge the effects of the federal governments ac-
tion on airport small businesses. For this reason, the airport DBEs
and commercial tenants merit federal assistance in the same way
as airlines and airports.
The AMAC members and the airport commercial tenants gen-
erally are an integral part of aviation and the airport industry. Col-
lectively these businesses are major economic generator for air-
ports, the communities in which they operate or are located. They
provide employment, pay taxes, perform services and contribute to
the efficient operation of airports, and provide vital services to
traveling public.
The AMAC is sympathetic and supportive of the airlines and air-
ports, but not at the expense or on the backs of small businesses
with locked in high rent guarantees. Thus, in AMACs view, the
survival of airport small businesses, in particular, DBE participa-
tion airport concessions contracts should be a priority concern of
Congress.
As you heard, airport operators are seeking federal financial as-
sistance to help them weather the current crisis, and to help defray
additional security operating costs. AMAC asks that you and other
members of House Small Business Committee insist that any legis-
lation providing relief for airport also include specific provisions for
financial assistance to airport small and disadvantaged businesses
and other commercial tenants.
We believe that as a matter of sound public policy and equity
that a portion of financial benefits accorded airports should be ex-
tended to airport DBEs and other airport commercial tenants
whether that assistance is provided through additional funds from
the Airport & Airways Trust Fund, through increased flexibility in
the use of passenger facility charge revenues, or through changes
in federal tax laws.
As a consideration of receiving additional federal funding or tax
benefit, an airport operator must be required to implement a plan
for assisting airport DBEs and commercial tenants.
My written testimony offers several proposals and I will not state
that.
Mr. Chairman, I have owned and operated and managed airport
concessions, including golf shops, newsstands, sports stores, res-
taurants, bookstores, business services for more than 20 years. My
current business, Business Traveler Services, provides internet ac-
32
cess, work stations, ATMs, prepaid phone cards, concierge service

to airport users. I can tell you from my personal knowledge and
from talking to other business owners that the types of actions and
assistance noted above would be very helpful.
For example, three to six months of rent abatement would pro-
vide another infusion of capital to help these businesses cover their
cost. Some of these airports have attempted to address this issue,
but they have not taken a large enough step.
Finally, Mr. Chairman, the general public has not regained its
confidence in air travel. As a result, our revenues are at all time
low and that trend will continue now that the war on terrorism has
been. Our lease agreements are fixed rents and are based upon
projected revenue streams. Clearly, the current state of air travel,
new security requirements, decreased passenger traffic have made
it nearly impossible for small or disadvantaged businesses to meet
their fixed expenses.
Therefore, AMAC is asking that Congress enact legislation that
will provide immediate relief for airport DBEs and other commer-
cial tenants. The House Small Business Committee has jurisdiction
over SBA programs that can provide small and some emergency
help, and we ask you to act urgently on legislation that makes air-
port businesses eligible for SBA economic disaster assistance.
Thank you sir.
[Mr. Swifts statement may be found in appendix.]
Mr. PENCE. Thank you, Mr. Swift, and without objection the
Chair will enter your statement as you helpfully abbreviated parts
into the record
Mr. SWIFT. Thank you.
Mr. PENCE [continuing]. Of the testimony today.
Hector Torres is our next witness. He brings to this panel 32
years of experience in the hospitality industry and hotel develop-
ment, and has been very busy about promoting Washington, DC
tourism, which apart from my commute into work is something I
certainly appreciate.
He is currently vice president of sales and marketing of Capital
Hotels of Washington, DC, and I might add in addition to his busi-
ness activities is also well known in this area as chairman of the
board of a group known as Identity, which is an inter-city youth
organization focusing on the Latino community.
And it is an honor to have you here, Mr. Torres, and you are rec-
ognized for five minutes.
STATEMENT OF HECTOR TORRES, VICE PRESIDENT, CAPITAL

HOTELS, WASHINGTON, DC, ON BEHALF OF THE HOTEL
ASSN. OF WASHINGTON
Mr. TORRES. Thank you very much, and good afternoon, Chair-
man Pence, distinguished members of the committee.
I am actually very honored to have the opportunity to speak on
behalf of 31 small independent hotels out of 83 member hotels of
the Hotel Association of Washington, DC.
My name, as earlier stated, is Hector Torres and I am vice presi-
dent of Capital Hotels, Washington, DC. We own and manage two
hotels, the Governors House Hotel and the St. Gregory, both lo-
33
cated in downtown Washington, DC, both members, of course, of

Hotel Association.
Like the rest of the nation, we have experienced in DC a major
negative economic impact in the wake of the tragic events of Sep-
tember 11th. The impact is heightened due to the fact of the clos-
ing of the Reagan National Airport, extended closing of the airport,
the front door, in fact, to our nations capital.
Because of the worldwide media to focus on our national capital,
until the hospitality and business economy of the nations capital
is revived, perception to the world will be that our nations econ-
omy remains crippled. As the nations capital, Washington, DC will
be the symbolic leaders of the nations return to normalcy, revital-
izing Washington, DC must be the first step in our nationwide re-
covery.
Within the Washington metropolitan region, the hospitality in-
dustry is the largest private sector employer, comprising in excess
of 3,000 businesses and 260,000 employees.
If the Washington, DC hospitality industry does not recover, your
favorite local restaurant, and even purveyors of food and other es-
sential supplies to Congress itself will be at jeopardy, negatively
impacted if not completely out of business. If you stopped at the St.
Gregory these past weeks, you would see very few visitors, an
empty lobby, and less in the past few weeks we have had to lay
off a tremendous amount of people.
This is equally true if you around the corner to the Red Sage
Restaurant, for example. They have had to curtail services, their
time of opening, and have also had to experience tremendous lay-
offs.
This is just merely a snapshot of what actually is pretty well
commonplace in our nations capitol and in the region. The trickle
down effect is in fact incalculable.
Reality: As Congresswoman Eleanor Holmes Norton has repeat-
edly expressed in the days after the opening of Reagan National
Airport, we must not look at Reagan Nationals opening as a vic-
tory lap. It simply is the beginning. We need to resume full service
in order to rid the perception that nationwide air travel is unsafe
and to return tourists to our city and nationally.
The hospitality industry normally supports 260,000 individuals
and their families. It pumps nearly $10 billion annually into our
economy.
The hospitality industry is losing over $10 million a day in our
region. In the next 100 days we anticipate the loss of nearly $1 bil-
lion.
Small businesses actually comprise of 90 percent of the business
supporting tourism and are either related to tourism or dependent
on tourism, and do not have the capitalization or cash reserves to
survive this downturn.
Metro DC hotels normally enjoy 80 percent occupancy this time
of year. We are currently running at approximately 40 percent.
Metro restaurants have experienced massive layoffs and a dra-
matic downturn and revenues may see more than 50 percent rev-
enue losses.
Small hotels occupancy has also dropped significantly, particu-
larly as they cannot count on a national advertising campaign to
34
support their losses in the form of advertising and market support.

Loss in some cases amount to up to 50 percent o occupancy.
On one group alone, the World Bank, our hotel, the St. Gregory,
lost $100,000 in one weeks time. It isaccording to World Bank
IMF, there were approximately 25 hotels participating directly or
indirectly in this event. So you can imagine by calculating our
small hotel $100,000 loss in one weeks time, actually represented
one-fifth of our total income for that given month.
The human toll falls on all the individual losing jobs as well,
those who earn salaries to support families and contribute to the
economy of our region.
Of the 10,500, and counting, jobs lost, many of them are His-
panic, blacks and of minority descent. Because they have actually
lost their sense of basically dignity because they are now going
back to a welfare-type situation, and the do not have any money
or sources to be able to fund even insurance payments.
DC currently hasthe DC tourism corporation and Mayor Wil-
liams have committed $1 million to implement marketing and ad-
vertising, public relation, promotional activities and reestablishing
Washington as a premier convention and visitor destination.
The city and the Washington tourism corporation are collabo-
rating with 29 businesses in the area as well to bring forth a cam-
paign to attract business into our nation.
We ask that Congress please help us in the process of helping
the small businesses in support of grants and/or low-interest loans
to be able to support such unemployment benefits as COBRA, as
well as to urge other vehicles within the government to support our
plight.
The rest of my document gives you some other strategic ideas
that we could implement, and I thank you very much the Hotel As-
sociation for your kind attention.
[Mr. Torres statement may be found in appendix.]
Mr. PENCE. The Chair thanks Mr. Torres, and without objection
we will see to it that your entire presentation is entered into the
record.
I am going to say David Chesebro?
Mr. CHESEBRO. Chesebro.
Mr. PENCE. Chesebro. Thank you.
Founded Daytona-Orlando Transit Service in 1982, beginning
with three employees and three vehicles. Two decades later the
company has grown to 42 employees and 14 vehicles that range
from local shuttles to interstate motorcoaches, and has expanded
and offer a wide range of service to include tour and charter devel-
opment originating at least out of the Daytona Beach, Florida are,
and the mainstay of DOTS has always been the Orlando Inter-
national Airport shuttle. The company currently offers employees
comprehensive benefits package which includes health care, dental,
profit sharing.
And David Chesebro currently serves, of course, as president and
owner of that company, and brings a very important small business
perspective to the current downturn in our travel economy, and is
recognized for five minutes for that reason.
35
STATEMENT OF DAVID CHESEBRO, PRESIDENT AND OWNER,
DOTS MOTORCOACHES, DAYTONA BEACH, FL, ON BEHALF
OF THE AMERICAN BUS ASSOCIATION
Mr. CHESEBRO. Good afternoon, Mr. Chairman, and members of
the committee.
My name is David Chesebro, and I am president and the founder
of DOTS Motorcoaches of Daytona Beach, Florida. I am pleased to
be here and represent 3,400 members of the American Bus Associa-
tion.
To begin, I would first like to thank you, Mr. Chairman, for your
leadership in convening this hearing and appreciate the oppor-
tunity to testify on this urgent matter.
ABA members are equally diverse ranging from Greyhound Bus
Lines, which provides service to 2,500 destinations, to my company
which provides service to and from the Orlando International Air-
port. However, most of the ABA member companies are small busi-
nessmen and women alike.
To give you an appreciation of what we do, I would like to take
a minute to describe my company and the service we provide. From
there, I will try to give the committee an appreciation of what the
September 11th attacks on New York City and Pentagon and the
consequent lack of travelers has done to my business as well as the
motorcoach businesses all over the country.
I founded DOTS in 1982, beginning with three employees and
three vehicles. Nearly 20 years later the company has grown to 42
employees, including 14 vehicles. Our services range from local
shuttles to interstate trips on motorcoaches. Like all the private
commercial bus industry, I receive no federal funding to support
my companys operational structure.
In addition to my shuttle service to and from the Orlando Inter-
national Airport, I provide shuttle and tour service throughout the
United States, including trips to Biloxi, Mississippi and Branson,
Missouri.
While these services have also suffered during the past month,
it is the effect of the September 11th attacks on my airport shuttle
service that forms the core of my testimony today.
The mainstay of DOTS has always been the airport shuttle. It is
approximately 75 to 80 percent of my business. DOTS grew stead-
ily from three round-trips a day to its current operating 15 hourly
round trips daily to and from the Volusia County area to the Or-
lando Airport.
To acquaint the committee with my post-September 11 troubles,
I would like to walk you through my operations. Normally at this
time of the year I can count on shuttle gross receipts of approxi-
mately $78,000 per month, equal to $2,600 per day based on a $25
one-way ticket to or from the airport.
Since the attacks, DOTS revenue has been down some $21,000.
Against this I have to maintain the vehicles and make monthly
payments on most of them. Since this is a great deal of revenue
for a business which grosses $1.7 million a year, this figure in-
cludes shuttle, charter and tour business.
Recently, I sent a memorandum to my employees, ask that they
voluntarily take time off each week so that I could keep all part-
time drivers on the payroll, and a copy of that is attached.
36
The effect of the attack on DOTS is even worse than it sounds.

Business is downwas down from December to July. Then in Au-
gust, I had seen an increase in business I thought would be an in-
dicator of a good autumn and holiday season. Of course, the events
of September 11 eliminated that possibility.
ABA members from California, Montana, Missouri, Florida,
North Carolina, Louisiana told ABA of a one-week losses ranging
from $20,000 into millions of dollars, and also cancellation rates of
30 to 80 percent. The cancellation includes trips planned for spring
of 2002.
Vectour, of Pennsylvaniathe largest privately owned ground
transportation company in North Americahas a business that is
more than 50 percent airport-related. It experienced an immediate
drop of business of about 40 percent. This loss will cost the com-
pany almost 7 million in cash between now and the end of the win-
ter.
This series of cancellation points out an even greater problem. As
I indicated, this time of the year is high season for many ABA op-
erators engaged in charter and tour services, as well as those of us
that serve airports close to major cities and United States tourist
attractions. Any loss of cash flow, especially during peak times, af-
fects the day-to-day operations as well as the operations into the
future.
Without these revenues, many motorcoach operators face a bleak
winter and maybe the prospect of shutting their doors for good.
The question for the committee and Congress is to decide how to
ease the effects of the attacks on this segment of the transportation
industry.
In sum, the motorcoach industry seeks financial assistance of
any sort until the spring and more normal transportation and trav-
el patterns reassert themselves. One recovery suggestion within
the purview of this committee is the expansion of access to small
business economic injury disaster loans and loan guarantees.
Under SBA regulations, businesses located within a declared dis-
aster are eligible for financial assistance from this program. The
nature of the motorcoach business is that our business is located
wherever our customers travel. The industry must have access to
these loans to foster recovery and loan guarantees to provide moti-
vation for equipment lenders to work with bus owners to meet
scheduled payments.
No one doubts the American people will return to the skies and
travel again. It is just a matter of time. However, until that day
businesses affected by the attacks on us will have to have financial
help in order to be in service when that day comes.
We are looking to members of Congress to aid the bus industry,
and indeed all of us in attaining this goal.
Once again, thank you for the opportunity to be with you today,
and I would be pleased to answer any questions you may have.
[Mr. Chesebros statement may be found in appendix.]
Mr. PENCE. Thank you, Mr. Chesebro.
And we will break a bit with convention, and the gentlelady from
the Virgin Islands and I will actually alternate questions to indi-
vidual panelists as we believe we will be imminently called for a
37
vote here after a quarter after, and I want to make sure that my
colleague and I both have opportunities to answer questions.
So with that, the Chair would direct the first question to Ms.
Adams.
You are on the front line of the travel industry as a travel agent.
My question to you would be to rate in some way the severity of
the current downturn. For instance, did your customers cancel
short-term plans to travel, or have they cancelled their Thanks-
giving and their Christmas travel plans? Can you give this com-
mittee some sense of the duration of the impact on our travel in-
dustry from your perspective?
Ms. ADAMS. I would be glad to, and I would dare say I am a pro-
totype for all travel agencies across the nation.
After September 11th, it was immediate cancellations; immediate
being defined in the next say 60 days. People just froze up, wanted
refunds, cancelled package tours. After about two weeks, we start-
ed receiving cancellations on some of our groups for March and
April into the Caribbean. We are in the northeast, they want to go
there.
Interestingly enough, we held our breath with the advancement
of our nations response on Sunday, and we indeed received the sec-
ond wave of cancellations well into the future Tuesday and
Wednesday of this week.
So the answer to your question, Mr. Pence, would be yes on all
the above. It is just whatever groups or individual leisure travel we
had has disappeared. Corporate seems to also be at a standstill.
Mr. PENCE. Going forward, can you give the Chair an estimate
of the number of months that you have seen plans cancelled?
Ms. ADAMS. We cannot see that far, thats how far. December, it
starts in December, and I will tell you that our season goes well
after Easter, June, July. We have a group in July that was cruising
that had to make some long-term commitments. That was under
deposit with over 53 passengers, fairly reasonably large sale for us,
and
Mr. PENCE. Cancelled.
Ms. ADAMS [continuing]. It fell apart immediately with 50 per-
cent. It came to a point of having so few we had to pull the plug
on the whole thing.
Mr. PENCE. Well, the gentlelady from the Virgin Islands is recog-
nized.
Ms. CHRISTENSEN. Thank you, Mr. Chairman.
Before I ask a question, I just wanted to say how great it is to
have such a diverse panel in front of us, and have the District of
Columbia represented as well. It is not often that that happens at
our committee hearings.
Lets see, where would I start? I am going to ask Ms. Adams a
question as well, although I wanted to say to Mr. Swift that this
afternoon the Minority Business Task Force of the CBC will be
meeting to take up specifically some of the issues that you raised,
and we raised them with the SBA Administrator yesterday as well.
We will continue to follow up with those issues. We had not focused
in on airport businesses, but on minority and disadvantaged and
women-owned businesses.
38
Ms. Adams, would you explain to the committee why having ac-
cess to a loan program that is based on ability to pay rather than
collateral is so important?
Ms. ADAMS. Currently, as most small businesses are service ori-
ented, we have no hard assets in order to even obtain letters of
credit. We need to collateralize our own personal property. We have
nothing left to collateralize. And quite candidly, all of those loans
for operational expenses right now are maxed out.
So the ability to repay would be vital to the formula for us. There
is nothing left we can give you. We do not have a thing.
Mr. PENCE. The next question would be for Mr. Swift. During
your testimony that I thought was very good and very informative,
by the way, you made reference to the fact that lease agreements
for most of the people that you are here representing are estab-
lished on the basis of fixed rents.
Can you give the subcommittee a number of the concessionaires
may be in jeopardy of default on their agreements due to reduced
sales? Give me a percentage of the industry basedbecause I find
thatI had a different expectation about how those agreements
might have been drafted based on overall sales and percentages.
But if is a fixed rent agreement, it sounds to me like we could be
in very serious trouble for these small business concessionaires?
Mr. SWIFT. Absolutely. Let me address it a couple of ways.
Number one, probably 90 percent of all contracts are with a fixed
rent, but not only a fixed rent, but a guaranteed rent against a per-
centage, whichever is higher.
Mr. PENCE. Okay.
Mr. SWIFT. So they are locked in, and these contracts are often
five years or longer. So as in the case of my company, we just re-
newed our contract at Hartsfield for another five years with a CPI
increase based on the average annual growth of the traffic at about
five or six percent. Taking a hit of anywhere from 30 to 40 percent
in traffic makes it quite difficult, excluding the fact that the meet
or greeters are not going to the airport. They are now part of the
mix of sales.
So in that regard most operators are on the fixed rents. What
used to be an average of 15 to 20 percent of your gross revenue was
towards your rent, now for some of us it represents anywhere from
40 to 70 percent of your gross revenue because of the locked-in re-
lationship to a fixed rent.
Mr. PENCE. The gentlelady from the Virgin Islands. Forgive me,
but I was just veryI am stunned by that. Maybe one quick follow
up if I could.
Ms. CHRISTENSEN. Sure.
Mr. PENCE. Is there any sense in your industry, your business
or elsewhere around the country, that companies that own airports
and operate facilities are working with vendors with these fixed
these fixed rent arrangements already? Has it been happening in
the last 31 days or is the expectation there that they will just sim-
ply grind down?
Mr. SWIFT. I can tell you this. Unfortunately, most of the rela-
tionships are with local government entities, and the speed at
which they are able to move is 90 to 180 days.
Mr. PENCE. Okay.
39
Mr. SWIFT. We need a fix right now.

Mr. PENCE. Okay.
Mr. SWIFT. I will also say that out of 400 plus airports we know
of two airports, DFW and the Reagan National, where they have
taken immediate steps to say we are going to adjust the rent now
rather than waiting six months.
Mr. PENCE. Two airports?
Mr. SWIFT. Correct.
Mr. PENCE. Okay. Thank you.
Ms. CHRISTENSEN. Mr. Torres, Im also a member of the Travel
and Tourism Caucus Steering Committee, and we had some meet-
ings with different groups, including the Travel Industry of Amer-
ica, who propose a tax credit for travel within the United States,
and the 100 percent meal deduction. We hadlet me see if I pro-
nounce itIRicci here
Mr. TORRES. Right.
Ms. CHRISTENSEN [continuing]. Testifying as to theIRicci, from
that restaurant, and some other proposals.
Would those help the Washington, DC economy?
Mr. TORRES. Absolutely, but everything helps to be honest with
you. Anything that is proactive that will support our case.
However, one of the key things is for Congress to help us in the
process of restoring full use of Reagan National Airport. As long as
that airport is operating on a limited basis, the city will appear to
the world as a crippled city. That is a message that we cannot af-
ford to continue sending out. It is dangerous. There is no way that
anyone will feel comfortable if the nations capitol itself is inacces-
sible.
Ms. CHRISTENSEN. I got that message very clear.
Mr. PENCE. My next question would also be for Mr. Torres. Could
you explain for the benefit of the subcommittee the General Service
Administrations premier lodging program, and how specifically
that would help small hotels like the one you operate in this time?
Mr. TORRES. Yes. Well, the premier lodging program, as you
know, is a GSA program that actually evaluates and supports the
marketing efforts hotels that are offering lodging to the govern-
ment traveler. And in fact, the response to the program has been
pretty well due to Washington hotels in over six months, and it
was supposed to have been given to us as a decision this October.
Unfortunately, that is delayed, and it is delayed almost to the point
that we do not know exactly when.
In fact, the way that it would help is it will support in a great
way the marketing efforts of Washington, DC. In addition to that,
it will give us, hopefully, an increase in rate. Washington, DC has
experienced rate increases as far as the federal per diem. Last year
it was one percent, and I have to say a poultry one percent as
against the rest of the nation receiving increases of 25 percent such
as cities like Boston that received up to a 50 percent increase in
the rate.
It helps our smaller hotels because generally the small hotels are
the ones that open-armwould welcome with open arms the gov-
ernment traveler. It helps the city entirely because it makes the
government traveler more viable as a real source of business, and
certainly we are competing, everybody competes effectively on that
40
business because small hotels cannot handle the large conventions,

and consequently work with the government very much in accom-
modating their traveling guests.
Mr. PENCE. Ms. Christian-Christensen.
The concessionaire businesses, 8(a) businesses and so forth is one
that is of great concern to the subcommittee and, of course, the
Congressional Black Caucus.
The businesses that you are describing, are they certified dis-
advantaged businesses?
Mr. SWIFT. Yes.
Ms. CHRISTENSEN. Are any of them 8(a)?
Mr. SWIFT. On the construction side, some of them are probably
8(a). But on the concession side of the coin, that is generally not
required of them to be 8(a), but they are all certified as to be
Ms. CHRISTENSEN. Just on a general level, have you been experi-
encing some of the difficulties that have always been coming to the
committee with getting contracts, getting concessions and so forth?
And we are looking at the Ataran being argued again at the end
of this month. Do you want to make some comments just generally
on the state of disadvantaged and minority businesses?
Mr. SWIFT. Certainly. Considering the fact that the focus of
AMAC is in support of that level of participation for women and
disadvantaged businesses, we see no immediate future for AMAC
to go away. In fact, we think our job and our responsibility has
been strengthened because the need is greater.
Unfortunately, far too many airports have taken the opportunity
not to make this part of the fabric of their institutions, so there is
some battles that we have to deal with it. If it was comfortable and
everyone went with the idea that it is good business to do business
with everyone in your community, there would be no need for a
firm or a company or an organization such as AMAC.
Ms. CHRISTENSEN. Let us hope that as we have to work towards
rebuilding the entire economy in light of what happened we can do
it in such a way that strengthens it across the board for all Ameri-
cans. I think that is a real challenge for us, but I think it is some-
thing that we really need to pay attention to in this particular time
when there may be a window, some opportunity to strengthen all
businesses.
Mr. SWIFT. If I may add, that is one of the elements of this crisis
period. It has underscored the fact that we are all Americans. No
one was left out of the crisis.
Ms. CHRISTENSEN. That is right. Thank you.
I do not have any further questions, Mr. Chairman, at this time.
Mr. PENCE. Thank you.
I had one quick question, and then I will recognize the gentlelady
for any closing remarks she might have, and we will wrap up this
panel and this hearing.
Mr. Chesebro, I had a question there. From the standpoint of
common sense, there was talk immediately after September 11th
about an increaseincrease usership of buses, that traffic had pos-
sibly increased for Greyhound services, not necessarily for airport
shuttles and the like, which would be impacted.
41
Some of your testimony seems to fly in the face of that. As you

are here not only on your own behalf but on behalf of the industry
as a whole, what has been, taking into account impact on shuttle
services like yours and others, the overall impact on the events of
September 11th on the busing industry, in your judgment? Posi-
tive, negative or breakeven?
Mr. CHESEBRO. Well, like I say, I have a hard time answering
for Greyhound. The ABA would be more representative of that than
I would.
Mr. PENCE. Right.
Mr. CHESEBRO. As a whole, some support companies, as I noticed
when I flew into Dulles yesterday, the Super Shuttle is reaping the
profits, and a lot of the cab companies coming this way with
Reagan being closed.
Myself, it has impacted me and the companies in the Orlando,
general central Florida area. I can speak on behalf of them. And
in that retrospect because with the travel agent industry consid-
ered also, that revenue is down on everybodys behalf in that area.
Now, some areas of the country, like I say, some busing into
some sections of the busing industry probably are profiting from it.
Mr. PENCE. Very good. Any closing remarks from my colleague?
Ms. CHRISTENSEN. You know, I did have one other question, Mr.
Chairman, to Ms. Adams.
After the airline bailout bill, did the airlines offer to return to the
old ticket reimbursement system for travel agents?
I know you are very much aware with the Virgin Islands problem
with that and as it affects all travel agencies, but particularly ours.
Ms. ADAMS. Unfortunately, they did not offer us anything if that
is what you are asking. We were already hurting from an August
20th wound when they cut our commissions by 60 percent. So going
into September 11th, we were in bad shape by 60 percent.
If you can imagine being a small business owner and getting a
fax at four in the afternoon on a Thursday to say tomorrow your
income for the airline tickets is cut by 60 percent, and then that
was August 20th.
We were limping, we were hurting, but we have tenacity with
small business people, we were scraping by, and then we got clob-
bered on September 11th.
And no, we have had no communication of such from the airlines.
Ms. CHRISTENSEN. Well, just in closing, as I was saying during
the break, the ripple effects from September 11 continue to get
wider and wider, and it is clear from yesterdays testimony and to-
days that, you know, we need to approach this with some sense of
urgency, especially with small businesses because they do not have
the ability to hold on and hang on much longer.
So, you know, we appreciate you coming. We appreciate your tes-
timony. And we remain committed to addressing the issues and
making sure that our small businessessmall businesses of all
Americans in this country get through this period and prosper in
the future.
Mr. PENCE. I too want to thank the panel, both panels for really
outstanding presentation, and also want to express appreciation to
my colleague and good friend, the gentlelady from the Virgin Is-
lands, for her ongoing commitment to the tourism industry as evi-
42
denced by a colossal commitment of her time today in this sub-

committee.
I also appreciate very much my colleagues observation of the di-
versity represented on this panel. I thought Mr. Swifts comments
were very eloquent and very moving. One of the flower growing out
of the ashes of September 11th is the realization that we as Ameri-
cans are all in this together and the unity that we have experi-
enced on Capitol Hill, I think, is simply an extension of the unity
that we sensed around the country.
I want to hopeas many of you and people you represent and
some of those who testified here today are going through difficult
times, I hope that you will leave Washington encouraged by the in-
terest that you have seen evidenced here and that I am sure you
will hear as you meet with representatives throughout the day or
however long you are in the nations capitol.
And I also want to leave you with the knowledge that I hope this
has been as encouraging to you as it has been informative to this
subcommittee. You have by your testimony today enabled us all on
this subcommittee to be much more aggressive, much more in-
formed in our advocacy of the interests of the small business com-
munity in the wake of September 11th, and for that I am person-
ally grateful and am grateful on behalf of the subcommittee.
With that, we are in a very timely way adjourned.
[Whereupon, at 12:30 p.m., the subcommittee was adjourned.]
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House Hearing, 107TH Congress - September 11, 2001 Plus 30: Are America's Small Businesses Still Grounded

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House Hearing, 107TH Congress - September 11, 2001 Plus 30: Are America's Small Businesses Still Grounded

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SEPTEMBER 11, 2001 PLUS 30: ARE

AMERICAS SMALL BUSINESSES

SUBCOMMITTEE ON REGULATORY REFORM

COMMITTEE ON SMALL BUSINESS

WASHINGTON, DC, OCTOBER 11, 2001

Serial No. 10731

Printed for the use of the Committee on Small Business

U.S. GOVERNMENT PRINTING OFFICE

For sale by the Superintendent of Documents, U.S. Government Printing Office

SUBCOMMITTEE ON REGULATORY REFORM AND OVERSIGHT

THURSDAY, OCTOBER 11, 2001

2001. The events of 11 September have reverberated throughout

month. But what about a restaurant or a newsstand that has lost

I look forward to hearing the testimony of our panelists this

STATEMENT OF JAMES K. COYNE, PRESIDENT, NATIONAL AIR

To put it quite simply, we face a catastrophe, a catastrophe un-

Pentagon. But even in North Dakota, just as you know, Congress-

members to realize their dreams in becoming either commercial or

STATEMENT OF MAUREEN TARASCIO, PRESIDENT AND

responsible for the management of Stapleton International Airport

increases in operating costs as a result of the additional security

at airports that are currently being borne solely by airport police,

STATEMENT OF DAVID WARTOFSKY, PARTNER, POTOMAC AIR-

is also an R&D lab for some remarkable airport technology that is

pendents who are failing financially, and who are standing by as

STATEMENT OF QUINTIN DEGROOT, PRESIDENT AND OWNER,

As a result of the terrorist attacks, many aviation businesses na-

their choice. The current ban prohibits international customers

Mr. PENCE. Almost 600 a day down to 26.

The second thing is we are in contact with FEMA at Republic

Mr. PENCE. Mr. Wartofsky, with others indicating in their testi-

The fastest way to implement things are actually procedural.

And of course, at the time we and everybody else in the industry

been caused by government action within the industry these kinds

Mr. PENCE. Before everything is lost.

Small Businesses Still Grounded, we will reconvene after a brief re-

which time I will lose my career of 33 years, my business, the roof

sector threatens to move swiftly from a ripple effect to a tidal wave

We will move to our next witness and encourage some attention

sis affecting small firms; however, I stress that this is an emer-

cess, work stations, ATMs, prepaid phone cards, concierge service

STATEMENT OF HECTOR TORRES, VICE PRESIDENT, CAPITAL

cated in downtown Washington, DC, both members, of course, of

support their losses in the form of advertising and market support.

The effect of the attack on DOTS is even worse than it sounds.

Mr. SWIFT. We need a fix right now.

business because small hotels cannot handle the large conventions,

Some of your testimony seems to fly in the face of that. As you

denced by a colossal commitment of her time today in this sub-

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